Loan/grant combinations may be arranged for applicants who can repay part of the cost. The home must be in a rural area as described above.
Foreclosure Prevention Foreclosure Moratorium
Chapter 14 of HUD Handbook 4330.1 REV-5, Administration of Insured Home
Mortgages, requires federally insured mortgagees to initiate a moratorium on foreclosures on property directly affected by a natural disaster for a ninety (90) day period from the date the President declared a disaster to have existed. The moratorium applies to the initiation of foreclosures AND foreclosures already in process.
Subsequent to the foreclosure moratorium, lenders are encouraged to consider
alternatives to foreclosure such as pre-foreclosure sales and deeds in lieu of foreclosure if the homeowner is not in a position to “cure” the mortgage delinquency. Refer to Mortgagee Letters 00-5, 02-17, 03-19, and 05-18, for FHA program requirements and incentive payments associated with these servicing approaches.
Forbearance In addition to the moratorium, HUD strongly recommends servicing actions for
homeowners whose properties were directly affected by the disaster, including special forbearances.
If delinquency may occur, as soon as possible after the disaster, the homeowner
should initiate an application for mortgage forbearance. Forbearance may be granted where the home has been damaged or destroyed by a natural disaster or where the homeowner is unemployed due to the disaster. Homeowners are usually not able to initiate a forbearance if they are not current in their payments, thus, in the interim, the homeowner may consult local disaster relief organizations and charities for mortgage assistance. To apply for a forbearance, the homeowner should contact the lender and complete any required paperwork. The homeowner may also be required to submit an affidavit explaining how her financial circumstances will improve by the end of the forbearance period. Forbearances are usually granted for a term of 90 days.
At the end of the forbearance period, the homeowner will be required to repay the
amount deferred. Multiple options may be available, including: lump-sum payment of the missed payments; adding the past due amount to the back-end of the mortgage, thereby extending the length of the mortgage until the entire balance is paid off; or increasing the amount of the monthly payment until the past due amount is repaid. The lender will usually send the borrower a forbearance agreement that will include the repayment terms. If not, or if the borrower wishes to obtain an alternative repayment arrangement, the homeowner should immediately submit a letter of intent to the servicer.
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