FHA Disaster-Related Policy Waiver Issued for Presidentially-Declared Major Disaster Area on the Big Island of Hawaii
The Federal Housing Administration (FHA) issued a waiver of its policy on the timeframe for completing the inspection of properties prior to closing or submitting the mortgage for FHA insurance endorsement in the May 11, 2018, Presidentially-Declared Major Disaster Area (PDMDA) on the Big Island of Hawaii, stemming from the Kilauea Volcanic eruption.
- For mortgages in process secured by properties in a PDMDA that have not closed or are pending endorsement, mortgagees must follow the guidance contained in the Single Family Housing Policy Handbook 4000.1 (SF Handbook) Section II.A.7.c, Inspection and Repair Escrow Requirements for Mortgages Pending Closing or Endorsement in Presidentially-Declared Major Disaster Areas. FHA’s current policy requires that a damage inspection be performed following the close of the Incident Period as defined by the Federal Emergency Management Agency (FEMA).
- FHA believes that Lava Flow Zones 3-9 on the Big Island of Hawaii have stabilized to the extent that further damage to the properties appears unlikely, despite FEMA not having closed its Incident Period for the PDMDAs in these areas. However, mortgagees should continue to monitor FEMA’s website to ascertain the latest information on this PDMDA as additional lava flow zones could be added until the Incident Period has closed.
- As a result, today FHA issued a waiver for properties on the Big Island of Hawaii in Lava Flow Zones 3-9, regarding the timing of the required inspection, allowing damage inspections to be completed beginning September 4, 2018, for the PDMDA on the Big Island of Hawaii.
- This waiver does not affect mortgagees’ obligations to exercise prudent lending practices and ensure that mortgages they submit for endorsement fully comply with FHA’s property eligibility requirements, as well as any property condition requirements related to claims processing.
- The Hawaii “Kilauea Volcanic Eruption” waiver is posted on the hud.gov waiver page.
Mortgagees can find more information about FHA’s PDMDA policies, as well as the 203(h) Mortgage Insurance for Disaster Victims Program and the 203(k) Rehabilitation Mortgage Insurance Program, on the FHA Resource Center’s Online Knowledge Base.
You can find a list of current FEMA Emergency Declarations in the New FEMA Major Declarations news item.