Wildfire Victims Get Mortgage Reprieve

Homeowners affected by the California wildfires may be eligible to defer their mortgage payments for up to 12 months. Mortgage financing giants Fannie Mae and Freddie Mac have issued guidelines for wildfire victims with single-family mortgages.

Victims may be eligible to stop making mortgage payments in three-month intervals, up to 12 months. They also may be eligible to avoid late fees during this temporary payment break, and to not have delinquencies reported to the credit bureaus.

Mortgage servicers have been authorized by Fannie and Freddie to suspend or reduce a homeowner’s mortgage payments immediately for up to 90 days without any contact from the homeowner if the servicer believes the homeowner has been affected by the disaster. For any additional payment forbearance of up to 12 months, homeowners will need to reach out to their lenders. Fannie Mae and Freddie Mac provide disaster relief information on their websites.

Also, HUD’s Section 203(h) program provides FHA insurance to disaster victims who have lost their homes and now face the task of rebuilding or buying another home. Borrowers with FHA-approved lenders may be eligible for 100 percent financing, including closing costs.

“Our thoughts are with the families and communities impacted by the devastating California wildfires,” says Carlos Perez, chief credit officer at Fannie Mae. “We urge people to stay safe during this challenging time. If homeowners have been impacted by the fires, we encourage them to call their mortgage servicer for assistance as soon as possible.”

Wildfires were sparked across 335 square miles of Northern California about two weeks ago. President Donald Trump has issued a major disaster declaration for Butte, Lake Mendocino, Napa, Nevada, Orange, Sonoma, and Yuba counties. An estimated 7,000 homes and structures have been destroyed, and 42 people have died.

Read more:
California Wildfires Heat Up Housing Crunch
2017 California Wildfires

Source: “HUD Announces Disaster Help for Wildfire Victims,” Napa Valley Register (Oct. 19, 2017); “Fannie Mae Reminds Homeowners and Servicers of Mortgage Assistance Options for Areas Affected by California Wildfires,” Fannie Mae (Oct. 13, 2017); “Freddie Mac Confirms Disaster Relief Policies Amid California Wildfires,” Freddie Mac (Oct. 13, 2017)


The following is a copy of the HUD Section 203(h) for your convenience.

Mortgage Insurance for Disaster Victims (Section 203(h))

Federal mortgage insurance for victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home.

Nature of Program: This program helps victims in presidentially designated disaster areas recover by making it easier for them to obtain mortgage loans and become homeowners or reestablish themselves as homeowners. The program provides mortgage insurance to protect lenders against the risk of default on loans to qualified disaster victims. Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and were destroyed or damaged to such an extent that reconstruction or replacement is necessary. Insured loans may be used to finance the purchase or reconstruction of a one-family home that will be the principal residence of the homeowner. This program resembles the Section 203(b) program (Mortgage Insurance for One- to Four-Family Homes), FHA’s basic mortgage insurance program.

Section 203(h) offers features that make homeownership easier. For example, no downpayment is required. The borrower is eligible for 100 percent financing. Closing costs and prepaid expenses must be paid by the borrower in cash or paid through premium pricing by the seller, subject to a limitation on seller concessions. Mortgagees collect from the borrowers an up-front insurance premium (which may be financed) at the time of purchase, as well as monthly premiums that are not financed, but instead are added to the regular mortgage payment.

Applicant Eligibility: Any person whose home has been destroyed or severely damaged in a presidentially declared disaster area is eligible to apply for mortgage insurance under this program, even if they were renting the property. The borrower’s application for mortgage insurance must be submitted to an FHA-approved lending institution within one year of the President’s declaration of the disaster.

Legal Authority: Section 203(h) of the National Housing Act (12 U.S.C. 1709(h)). Regulations are at 24 CFR part 203.

Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner, U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.

Information Sources: Administering office and HUD field offices. On the Web

Current Status: Please verify with the HUD or your lender


The following is a copy of 12 U.S.C 1709(h) Code
referenced by HUD Section 203(h) above

12 U.S.C. 1709(h) Disaster housing

Notwithstanding any other provision of this section, the Secretary is authorized to insure any mortgage which involves a principal obligation not in excess of the applicable maximum dollar limit under subsection (b) of this section and not in excess of 100 per centum of the appraised value of a property upon which there is located a dwelling designed principally for a single-family residence, where the mortgagor establishes (to the satisfaction of the Secretary) that his home which he occupied as an owner or as a tenant was destroyed or damaged to such an extent that reconstruction is required as a result of a flood, fire, hurricane, earthquake, storm, or other catastrophe which the President, pursuant to sections 5122 (2) and 5170 of title 42, has determined to be a major disaster.

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