AHA - The Road Home: What You Need to Know About Assistance Available When Disaster Strikes: Federal & Lender Resources for Homeowners

When natural disasters strike like Hurricanes Irma and Harvey with such overwhelming and devastating consequences, Americans are quick to respond with emergency relief in the form of financial donations, food and clothing. However, homeowners need to be aware that in addition to losing the roof over their heads and all their possessions they are also in danger of being whipsawed by unexpected financial consequences form their mortgage lenders and services.

Here are some things homeowners need to know and what steps they can take to mitigate the impact of their losses and forestall additional hits on their already strained financial resources and emotions:

If you are getting ready to buy a house in a hurricane-impacted area:

• Be prepared for a delayed closing. At a minimum, most lenders have a "disaster protocol" that will need to be followed for hurricane impacted areas.
• Many lenders require a "post-event" re-appraisal of the property that could impact the valuation and therefore the ability-to-repay the loan calculus, the sales price, the loan-to-value or other critical components of the transactions. Other appraisal issues may impact the transaction besides those that affect the safety and habitability of the home.
  

If you have a home in a certified flood area covered by the National Flood Insurance Program:

• If you live in a home that has paid flood insurance premiums to the National Flood Insurance Program (NFIP), you may be able to make a claim under the policy.
• Note that not all areas that flood in a hurricane are eligible for coverage under the NFIP.
• There are caps on the amount that can be claimed. For single family residences, up to $250,000 is available for building damage and up to $100,000 for the contents.
  

Other federal resources:

• FEMA Grants: If you are impacted by a storm, be sure to register with the Federal Emergency Management Agency (FEMA) to coordinate assistance and apply for a grant. You can register online here or by calling 1-800-621-3362. You will need your homeowner's insurance information handy.
  • What is covered? Review this website for the list, but child-care expenses, essential household items, clean-up items (ex: dry vacuum), home repair, and temporary housing.
  • What is not covered? Anything covered by insurance and claims on second homes.
• Small Business Administration (SBA) loans: Generally, the SBA offers low-interest loans to homeowners to cover recovery and repair expenses that are not covered by insurance. You may be able to borrow up to $200,000 to cover repair costs and up to $40,000 to replace clothing, furniture, appliances and vehicles. Approval is subject to some degree of credit review.
• What you need to know: Be aware that right now, if you apply for an SBA loan, any funds that you may qualify for under a FEMA grant may be reduced by the same amount. This is known as the "Duplication of Benefits" issue.
  

What can you request form your mortgage lender/servicer?

• Housing Counseling: If you are concerned about making your monthly payment, we highly suggest speaking to a housing counselor before calling your lender to discuss options. A list of HUD-approved housing counseling agencies is available here.
• Forbearance: If the disaster has caused you a hardship that prevents you from being able to make your monthly mortgage payment, you can ask you servicer to suspend your obligation to pay your mortgage or make partial payments for a set/agreed upon period of time (known as a forbearance). The amount of the payment and interest will likely not be forgiven, and if this is the case, you will need to catch up once your agreed upon time-period is over; however, if you can contact your lender/servicer in advance, late fees or penalties for a missed payment will likely not be charged.
  

What About Your Homeowner Insurance Policy?
Definitely contact your insurance agent to determine what might be covered. While it may not include major structural damage, it may cover some damage to the contents or personal possessions - depending upon the terms and conditions of your policy.

America's Homeowner Alliance  is here to support you, as you may be facing these very challenging circumstances related to recent weather events. This is part our mission: to protect and promote sustainable home ownership for all segments of America.

• For more information on AHA or to sign up with The Mortgage Collaborative discount, contact Rod Luckhart.