Compliance Newshub
Disaster News

1. Purpose. This Circular expresses concern about the Department of Veterans Affairs (VA) home loan borrowers affected by severe storms, straight-line winds and tornadoes in the state of Alabama, and describes measures mortgagees may employ to provide relief. Mortgage servicers and borrowers alike should review VA’s Guidance on Natural Disasters to ensure Veterans receive the assistance they need. (https://www.benefits.va.gov/ho... or https://www.benefits.va.gov/WARMS/docs/admin26/m26_04/Chapter_21.docx.) 

2. Forbearance Request. VA encourages holders of guaranteed loans to extend forbearance to borrowers in distress as a result of the disaster. Careful counseling with borrowers should help determine whether their difficulties are related to this disaster, or whether they stem from other sources that must be addressed. The proper use of authorities granted in VA regulations may be of assistance in appropriate cases. For example, Title 38, Code of Federal Regulations (C.F.R.), section 36.4311 allows the reapplication of prepayments to cure or prevent a default. Also, 38 C.FR. 36.4315 allows the terms of any guaranteed loan to be modified without the prior approval of VA, provided conditions in the regulation are satisfied. 

3. Moratorium on Foreclosure. Although the loan holder is ultimately responsible for determining when to initiate foreclosure, and for completing termination action, VA has requested on its website (https://www.benefits.va.gov/homeloans) that holders establish a 90-day moratorium from the date of a disaster declaration on initiating new foreclosures on loans affected by major disasters. VA regulation 38 C.F.R. 36.4324(a)(3)(ii) allows additional interest on a guaranty claim when eventual termination has been delayed due to circumstances beyond the control of the holder, such as VA-requested forbearance. Due to the widespread impact of the disaster, holders should review all foreclosure referrals to ensure that borrowers have not been affected significantly enough to justify delay in referral. Any questions about impact should be discussed with the VA Regional Loan Center (RLC) of jurisdiction. 

4. Late Charge Waivers. VA believes that many servicers plan to waive late charges on affected loans, and encourages all servicers to adopt such a policy for any loans that may have been affected. 

5. Credit and VA Reporting. In order to avoid damaging credit records of Veteran borrowers, servicers are encouraged to suspend credit bureau reporting on affected loans. VA will not penalize affected servicers for any late default reporting to VA as a result. Please contact the appropriate RLC with any questions. 

6. Activation of the National Guard. Members of the National Guard may be called to active duty to assist in recovery efforts. VA encourages servicers to extend special forbearance to National Guard members who experience financial difficulties as a result of their service. 

7. Rescission: This Circular is rescinded April 1, 2020. 

MReport--Stephanie Bacot

HUD announced today that it will provide foreclosure relief for the victims of Alabama’s deadly tornados that occurred earlier this week. Homeowners in certain areas affected who are at risk of losing their homes because of the disaster may be able to avoid the initiation of foreclosure for 90 days under this protection, and additional protection is available for low-income renters as well.

This announcement is less than a week after HUD announced its approval of the U.S. Virgin Island’s latest disaster recovery action plan, which will invest an additional $779 million to help the state continues to rebuild from Hurricanes Maria and Irma.  

A few of the key things HUD offers those covered are immediate foreclosure relief or an automatic 90-day moratorium on foreclosures of Federal Housing Administration (FHA)-insured home mortgages commenced for the counties covered under the Presidential declaration. In addition, it makes mortgage insurance available to disaster victims whose homes were destroyed or damaged beyond repair. Also, HUD's Section 203(k) loan program enables those who have lost their homes to finance the purchase or refinance a house along with its repair through a single mortgage. Homeowners who have damaged houses can also finance the rehabilitation of their existing single-family home.

In an effort to get help to those who need it, the department will share this information with the Federal Emergency Management Agency (FEMA) and the State on housing providers that may have available units in the impacted counties. This includes Public Housing Agencies and Multi-Family owners. The Department will also connect FEMA and the State to subject matter experts to provide information on HUD programs and providers.

For the full report read here.

DSNews--Donna Joseph

The U.S. Department of Housing and Urban Development (HUD) on Friday announced its approval of the U.S. Virgin Islands' latest disaster recovery action plan. An additional investment of $779 million was sanctioned by HUD to help support the state’s effort in rebuilding from hurricanes Maria and Irma.

The additional funds are provided through HUD’s Community Development Block Grant—Disaster Recovery (CDBG-DR) Program. The program is designed to address the lingering aftermath of unforeseen events such as hurricanes including serious damage to housing, business, and infrastructure.

Commenting on the approval of the recovery plan, Ben Carson, HUD Secretary said, “Today’s announcement is an important milestone as we help the U.S. Virgin Islands rebuild.” He also pointed out that this money will directly benefit the communities who have suffered substantial damage. The recovery amount is required by HUD to be targeted especially to local communities that experienced the greatest impact. The announcement also stressed on the importance of spending the relief funds in a manner that helps disaster victims. HUD stated that it will impose strict conditions and financial controls on the use of these funds.

Last week, HUD had also announced the approval of Puerto Rico’s latest disaster recovery plan as well as the disbursement of $8.2 billion as part of the grant made available to the island’s recovery by Congress in 2018. Similar to funds allocated to the Virgin Islands, these also came with stringent HUD oversight. The heightened scrutiny of how these funds are spent in Puerto Rico's recovery include enhanced monitoring of expenses as well as other measures designed to ensure Puerto Rico's legal and prudent use of the funds, HUD said in its statement.

As part of its initiative to get communities affected by natural disasters back on their feet, HUD provides flexible grants to help cities, counties, and states recover from Presidentially declared disasters, especially in low-income areas—subject to availability of supplemental appropriations. In response to Presidentially declared disasters, Congress may appropriate additional funding for the CDBG-DR Program as Disaster Recovery grants to rebuild the affected areas and provide crucial seed money to start the recovery process, and help communities and neighborhoods that otherwise might not recover due to limited resources.  

MReport--Radhika Ojha

The U.S. Department of Housing and Urban Development (HUD) reaffirmed its commitment to get Puerto Rico back on its feet after the devastation caused by Hurricane Maria in late 2017. The agency approved the island nation's latest disaster recovery plan as well as the disbursement of $8.2 billion as part of the grant made available to Puerto Rico's recovery by Congress in 2018. However, this approval comes with tight fiscal controls.

“This is an unprecedented investment and since Puerto Rico has a history of fiscal malfeasance, we are putting additional financial controls in place to ensure this disaster recovery money is spent properly,” said HUD Secretary Ben Carson. “With stringent HUD oversight, these dollars should have a real, lasting impact on Puerto Rico and help our fellow citizens who are struggling to recover from these devastating storms.”

HUD said that its approval of Puerto Rico's action plan makes the island nation eligible for Congressionally appropriated disaster relief funds which will be awarded through HUD's grant programs.

The heightened scrutiny of how these funds are spent will include enhanced monitoring of expenses as well as other measures designed to ensure Puerto Rico's legal and prudent use of the funds, HUD said in a statement.

On its part, Puerto Rico has said that it will address the "urgent humanitarian needs" of the island's residents while "also developing and implementing a transformative recovery." The amended action plan submitted by the island includes an analysis of early damage estimates and gives details about an initial program design to address the island's recovery with the first tranche of $1.5 billion that was approved by HUD as well as the additional $8.2 billion.

The action plan indicated that the parameters within which the remaining funds would be spent would be outlined in forthcoming federal guidelines, and its proposed uses determined in subsequent action plans.

In February 2018, Congress had approved $1.5 billion towards the recovery efforts with an additional $18.5 billion approved in April, which also included funds targeted to reinstating the electric grid and other mitigation activities after the devastation caused by Hurricanes Irma and Maria in 2017.

Housingwire--Ben Lane

With parts of Texas still recovering from the damage caused by Hurricane Harvey in 2017, the Department of Housing and Urban Development announced Monday that it is granting an additional $652 million to aid in the recovery.

The new funding will supplement the more than $5 billion that HUD originally gave to Texas to recover from Harvey.

According to HUD, this new grant money will come through HUD’s Community Development Block Grant—Disaster Recovery Program and will be used for the restoration of damaged and destroyed homes, businesses, and infrastructure in the hurricane-affected areas.

CDBG-DR grants support a variety of disaster recovery activities including housing redevelopment and rebuilding, business assistance, economic revitalization, and infrastructure repair.

“Today, we’re taking another important step along the path to recovery for hard-hit areas in East Texas,” HUD Secretary Ben Carson said. “HUD is committed to working alongside Texans to rebuild their homes, restore their businesses and repair their critical infrastructure.”

With the newly announced grant, HUD will have given a total of more than $5.7 billion for recovery efforts in Texas.

“I am grateful to Secretary Carson for his tremendous partnership throughout the recovery and ongoing rebuilding process and for his leadership from the very beginning,” Texas Gov. Greg Abbott said in a statement. “With these funds, Texas will do more than rebuild. We will rebuild our communities stronger and more resilient than before.”

DSNews--

A little over a month following Alaska’s 7.0 magnitude earthquake, The U.S. Department of Housing and Urban Development (HUD) has announced they are speeding up disaster assistance efforts for the state. On January 31, President Donald Trump issued a major disaster declaration for Anchorage and affected counties which provided immediate foreclosure relief. This allowed HUD to offer a 90-day moratorium on foreclosures of Federal Housing Administration-insured (FHA) home mortgages.

Also, HUD will provide an automatic 90-day moratorium on foreclosures of FHA-insured home mortgages to displaced homeowners and low-income renters. Several options are being offered for families who need financing to replace, repair, or refinance in the wake of the disaster.

Further, HUD's Section 203(h) program provides mortgage insurance to disaster victims whose homes were destroyed or damaged beyond repair. This means borrowers from participating FHA-approved lenders are eligible for 100 percent financing, including closing costs. HUD's Section 203(k) loan program enables those who have lost their homes to finance the purchase or refinance of a house, along with its repair through a single mortgage. The offer extends to existing single-family residents needing to finance repair damage.

With this announcement, homeowners and low-income renters forced from their homes in areas affected by the earthquake have more help available. In an effort to get the word out to those who need it,  HUD is sharing information with the Federal Emergency Management Agency. They are also reaching out to housing providers that may have available units in the impacted counties, including public housing agencies and multi-family properties.

To read more about HUD’s efforts in Alaska here.

National Mortgage News--Patrick Mccreless, The News Herald, Panama City, Fla.

Modular houses typically referred to as tiny homes could be a quick, relatively cheap living option for residents recovering from Hurricane Michael.

Some area officials say that, as long as it adheres to basic Florida building codes, a tiny home can be erected in the county in residential zones. Interest in the topic has ignited on local social media sites in recent weeks after at least one out-of-state tiny home manufacturer started advertising its product in the area to help address the housing shortage since the hurricane.

Ian Crelling, community development director for Bay County, Fla., said tiny homes are allowed in the unincorporated areas.

"They're allowed, they just need to meet Florida building code on things like wind load designs, and meet certain requirements for foundations, room height, energy codes and of course flood zone requirements," Crelling said.

Crelling said that for instance, any home built in the county must have at least one 70-square-foot room. Also, ceilings must be at least 7 feet high.

According to current county records, there have been no permit requests for tiny homes since the Oct. 10 hurricane, which damaged or destroyed hundreds of houses in the area.

Crelling said the only questions he's really gotten from residents on the issue are if they can buy storage units and convert them into tiny homes. Again, such a structure must still meet all state codes and the building would need proper permitting, Crelling said.

Bo Creel, president of EPCI Code Administration Services, which provides building department services for Panama City, said that like the county, residents must meet standard state code requirements to build a tiny home in the city.

"According to the code it's got to at least have a kitchen and the kitchen has to be a minimum of 150 square feet," Creel said.

Creel said he didn't think EPCI had issued any permits for tiny homes in the city since the hurricane.

"A lot of people have talked about them, but nobody has pulled the trigger," Creel said of tiny homes.

Allen Childs, owner of Tiny Houses of Georgia, hopes to end that hesitation.

Childs said he started advertising his company in the county a few weeks ago as an option for residents struggling to recover from the hurricane. Childs said he doesn't normally buy advertising in disaster areas.

"It was just my idea to do it because a friend of mine drove through the area and saw all the devastation," Childs said. "I wanted to help get in affordable housing down there."

Childs said his homes, which are pre-made and then delivered, are typically 400 square feet and cost between $50,000 and $60,000 each.

"This is very affordable housing and doesn't look like a mobile home," Childs said. "If you ordered now, I could deliver it in a week and then we'd just need to hook up utilities ... and we work with people on money and financing."

The area's interest in Childs' tiny homes appears to be significant.

Childs said that he received between 300 and 400 calls about his services within a week after advertising in the area.

"I heard such heartbreaking stories," Childs said.

Childs said he installed his first home the county in Lynn Haven about 30 days ago.

"And I'm working on other orders," he said of the area. "I've got a guy wanting to buy five homes to rent out to low-income families."

Tribune Content Agency

WASHINGTON — The Office of the Comptroller of the Currency (OCC) today issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks affected by severe winter weather in the Midwest and Northeast regions of the United States to close.

In issuing the proclamation, the OCC expects that only those bank offices directly affected by potentially unsafe conditions will close. Those offices should make every effort to reopen as quickly as possible to address the banking needs of their customers.

OCC Bulletin 2012-28 “Supervisory Guidance on Natural Disasters and Other Emergency Conditions” lists some actions bankers could consider implementing when their bank operates or has customers in areas that are affected by a natural disaster or other emergency condition.

Related Links

• Proclamation (PDF)
• OCC Bulletin 2012-28, Supervisory Guidance on Natural Disasters and Other Emergency Conditions

DSNews--Donna Joseph

The United States experienced 11 natural disaster events that exceeded $1 billion in damage during 2018, according to data released by CoreLogic.While the wildfires scorched the West Coast of the U.S., hurricanes Michael and Florence battered the Gulf and East Coast.

From typhoons and cyclones to earthquakes, natural disasters in the past year ravaged places such as Indonesia, Japan, and Alaska. Volcanoes made the news in Hawaii, expanding the island’s terrain. Per CoreLogic report, a total of 11 western states in the U.S. had at least one wildfire that exceeded 50,000 burned acres; the leading states being California and Oregon.

The number of acres burned the past year is the eighth highest in U.S. history as reported through November 30, 2018. The report also noted that 1,000-year flood events took place in Maryland, North Carolina, South Carolina, Texas, and Wisconsin. Out of Dallas, Texas, and Colorado Springs, Colorado experienced severe convective storms with large hail. A total of 82 tornado outbreaks ravaged several parts of Western Louisiana and Arkansas, all the way down to Southern Florida, and up to Western Virginia.

In addition to the data on damages exceeding $I billion in the U.S. alone, quoting data from the National Oceanic and Atmospheric Administration, CoreLogic stated that last year’s count of billion-dollar events is a decline from the previous year. Both 2017 and 2018 have tracked far above the 1980-2017 annual average of $6 billion in total dollar amount in one year, it indicated.

Over 1,600 significant flood events occurred in the U.S. in 2018, wherein 59 percent of which were flash flood-related. The residential and commercial flood damage caused by Hurricane Florence in North Carolina, South Carolina, and Virginia is projected to be at $19 billion to $28.5 billion—out of these, roughly 85 percent of residential flood losses were uninsured—according to CoreLogic.

The damage caused by the 2018 Atlantic Hurricane season that saw 15 named storms resulted in landfall along the U.S—making 2018 the third back-to-back season of above-average hurricane activity in the Atlantic, the report noted.

“No one can stop a hurricane in its tracks or steady the ground from an earthquake, but with more information and an understanding of the risk, recovery can be accelerated and resiliency can be attained,” said Howard Botts, VP and Chief Scientist - Insurance and Spatial Solutions at CoreLogic.

PURPOSE: The purpose of this circular is to extend the rescission date of the original circular from  “January 1, 2019” to “January 1, 2020”.

See VA Circular 26-17-39, Change 1

See VA Circular 26-17-39

National Mortgage News--Paul Centopani

As the government shutdown enters its third week, mortgage servicers are activating the response plans they normally use during hurricanes and wildfires to assist federal workers who may have trouble paying their mortgages.

On Jan. 4, the president said he's prepared to keep the shutdown going for "months or even years." With that kind of ambiguity surrounding Washington, federal employees need fallbacks for their mortgages.

The shutdown impacts nearly 800,000 government employees. About 420,000 are currently working without pay and 380,000 are furloughed and not working at all.

During the shutdown in 2013, the FHA, Fannie Mae and Freddie Mac all called for temporary postponement on mortgage payments for furloughed workers. Lenders are offering paycheck loan assistance programs this time around.

Credit unions like Navy Federal and PenFed, are providing 0% APR loans for impacted members who have established direct deposit accounts with them.

"Our members deserve peace of mind during a government shutdown, and eligible members can register to get some relief," Tynika Wilson, Navy Federal senior vice president of debit card and fund services, said in a press release.

Mortgage servicers offer forbearance to bridge the gap.

"LoanCare is working with customers who have been impacted by the federal government shutdown, which may include normal forbearance or other relief," Tim O'Bryant, senior vice president of customer experience at LoanCare, said in a statement to National Mortgage News.

"Mortgage servicers can offer assistance, such as forbearance, to customers who are struggling to make their mortgage payment. Federal government employees who will experience difficulty paying their mortgage due to delays in receiving a paycheck should contact their mortgage servicer to discuss assistance options," Ruth Green, the chief operating officer of Primary Residential Mortgage, said in a statement to NMN.

Loan applications already dropped in light of the market uncertainty. With those furloughed technically being unemployed, it presents problems at the closing table with the documents required, including recent paystubs and employment verification.

"We are providing flexibilities, where possible, in order to assist customers in closing their transaction on time," Green continued. "The most significant impact is for customers in rural communities who have applied for USDA Rural Housing financing. At this time USDA is not issuing commitments that allow lenders to close these transactions."

If the shutdown does drag out, companies should stay proactive in assisting struggling homeowners.

"In the event the shutdown looks like it will persist into February, we plan to do an outreach campaign to educate customers on the forbearance option. If a customer has a unique situation or special circumstance, our management team and loss mitigation department are ready to assist," said O'Bryant.