Housing agencies offer relief amid Hawaii's wildfires

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The Department of Housing and Urban Development, Fannie Mae and Freddie Mac have announced ways borrowers affected by Hawaii's wildfires can get help with their mortgage obligations if they need it.

Relief available from HUD includes a 90-day moratorium on foreclosures affecting loans insured by the Federal Housing Administration or guaranteed under Section 184, a program for Native American borrowers. HUD is also providing similar relief to seniors who have Home Equity Conversion Mortgages.

Also, Fannie and Freddie, which are two government-sponsored enterprises that back a significant number of mortgages in the United States, are offering affected borrowers up to a year of forbearance on their payments without fees or penalties.

"The safety and well-being of those impacted by the historic wildfires in Hawaii is our top priority," Cyndi Danko, senior vice president and chief credit officer in Fannie Mae's single-family division, said in a press release about the disaster, in which nearly 100 people have died.

"Once feasible, we encourage homeowners facing hardship due to the wildfires to contact their mortgage servicer to discuss forbearance options as soon as possible," Danko said.

Through an official disaster declaration, President Biden has opened the affected region up to other types of federal assistance, including grants for temporary housing and repairs. Low-cost loans to cover uninsured property damages may also be available.

Growing disaster risks that have strained the mortgage industry and property insurers. In response, housing agencies like Fannie have been looking into how they might be able use available risk models to size up the concern and better manage it.

Hawaii has a history of exposure to both brushfire and hurricane risks. The island of Maui in particular, which was a focal point in the most recent fires, was last beset by these types of disasters during 2018's Hurricane Lane.

Hurricane risk is expected to be moderately high in Hawaii this year, and could compound concerns related to recent fires.

"This season we expect near to above-normal tropical cyclone activity across the Central Pacific," Christopher Brenchley, director at the National Weather Service and the Central Pacific Hurricane Center, said at a press conference earlier this year. The area is typically at high risk for storms between June and September.

Meanwhile, the most recent wildfires alone have damaged thousands of residential and commercial structures.

More than 3,088 homes within $1.28 billion in reconstruction cost value lie within three fire-perimeter areas, according to estimates in a report by Jon Schneyer, director of catastrophe response at CoreLogic.

Lahaina is the largest of the three, encompassing 2,808 residential properties with a reconstruction cost value of nearly $1.13 billion. Another 275 impacted properties with a reconstruction cost value of almost $146.63 million are in Pulehu. Five homes with an RCV of a little over $4.21 million are in Pukalani.

Not all the multi- and single-family properties within the three perimeter areas sustained damage.

But the fire destroyed an estimated total of at least 2,200 structures in and around Lahaina, according to a Kroll Bond Rating Agency commercial mortgage-backed securities report.

Hawaii Gov. Josh Green may set restrictions on the sale of fire-damaged homes to protect local owners, according to a report by Time magazine.