www.hudclips.org U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER MORTGAGEE LETTER 92-40 TO: ALL APPROVED MORTGAGEES ATTENTION: Single Family Servicing Managers SUBJECT: Assistance to Mortgagors Adversely Affected by Hurricane Andrew On August 28, 1992, the Department of Housing and Urban Development (HUD) issued Mortgagee Letter 92-27 which provided specific information to assist mortgagees in responding to hurricane victims with FHA-insured mortgages. However, due to the severe devastation which resulted from the hurricane, it is necessary to provide additional information. This letter contains certain relief measures which mortgagees are to extend to mortgagors who are confronted with hardships which resulted from the hurricane. 1. MORTGAGE ASSISTANCE PAYMENTS. The Federal Emergency Management Agency (FEMA) implements a temporary mortgage and rental payments assistance program under Section 408(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (P.L. 93-288). 44 CFR 206.101(g) sets forth the provisions of the program. Accompanying this letter you will find a verbatim retyped copy of FEMA's April 1, 1991, program guidance for mortgage lenders. This publication sets forth all information regarding the mortgage assistance program. (See attachment No. 1). Since the document contains FEMA's policy, if you have any questions, please contact FEMA. In addition to the temporary offices set up by FEMA in the Florida and Louisiana hurricane Andrew areas, the following two FEMA permanent Disaster Field Offices offer information and assistance to persons affected by the hurricane. Lenders may also communicate with these latter offices for guidance regarding the mortgage assistance payments program. Eastern Executive Office LeJune and 36th Street Miami, FL 33159 (305) 876-1300 _____________________________________________________________________ 2 One American Place 400 Main Street, Suite 800 Baton Rouge, LA 70825 (504) 343-0704 To inform mortgagors about FEMA's mortgage assistance payments program, we modified "Mortgagee's First Notice - HUD Letter No. 1" found in Appendix 26 of HUD Handbook 4330.1 REV-3, Administration of Insured Home Mortgages. See attachment No. 2 of this letter for a copy of the revision. 2. DEEDS-IN-LIEU. In addition to the requirements concerning acceptance of deeds-in-lieu contained in Mortgagee Letter 92-27, listed below are additional requirements: Mortgagors with FHA-insured mortgages on properties that have been destroyed may not have enough hazard insurance coverage to completely restore their homes or sufficient income to keep their mortgages current. In those cases, the Department will be prepared to pay off the mortgage in exchange for a deed-in-lieu of foreclosure and an assignment of the insurance proceeds. If you have any questions about the contents of this letter, please contact the HUD Field Office which has jurisdiction over the properties affected by the hurricane. Sincerely yours, Arthur J. Hill Assistant Secretary for Housing - Federal Housing Commissioner Attachments _____________________________________________________________________ ATTACHMENT #1 FEDERAL EMERGENCY MANAGEMENT AGENCY MORTGAGE AND RENTAL ASSISTANCE PROGRAM INFORMATION FOR MORTGAGE LENDERS What is the Mortgage and Rental Assistance Program? Under Section 408 (b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, as implemented by 44 CFR 206.101 (g), the Federal Emergency Management Agency (FEMA) may provide financial assistance to eligible individuals who have lost their jobs and/or businesses because of a major disaster. In these affected individuals (i) are not able to make their mortgage payments as a result of disaster-related financial hardship (lost of income), and (ii) have received a written foreclosure notice or notice of intent to foreclose from their mortgage lender, FEMA may then provide eligible individuals with financial assistance in the form of a check equal to their actual mortgage payments. The Mortgage and Rental Assistance Program is intended to provide emergency assistance to disaster affected individuals who, without such assistance, would be dispossessed from their primary residence. What are the general eligibility requirements that applicants must satisfy? In order to receive assistance, applicants are required to provide to FEMA the following: (i) proof of occupancy at the mortgaged property, (ii) proof of pre-disaster business ownership/employment which was "interrupted" as a result of the disaster, and (iii) proof of intent to foreclose or notice of foreclosure. The location of the primary residence is not a condition of eligibility. What is the mortgage lender's role in this process? Applicable law requires that a need for mortgage assistance be established and verified. This need is evidenced by the mortgage lender's certification that (i) a post-disaster mortgage payment delinquency exists, and (ii) because the mortgage loan is in arrears, lender intends to initiate (or have initiated) foreclosure proceedings. Page 1 of 3 _____________________________________________________________________ ATTACHMENT #1 If the mortgage loan is an ARM (or other floating rate) loan, mortgage lenders should provide either an average monthly payment amount or the most recent monthly amount which is outstanding. Adjustments will be handled by FEMA at the end of the initial eligibility period. What is the specific form of assistance provided? Mortgage assistance is a grant made by FEMA to an eligible applicant, and does not have to be repaid by the applicant (absent fraud, misuse of funds, etc.). As soon as an applicant has been determined to be eligible for mortgage assistance, that applicant will receive a check equal to their actual monthly mortgage payment. After this initial eligibility period, applicants will have to be re-certified in order to continue receiving assistance. There is no maximum amount eligible for payment. Assistance will be provided for actual payment amounts. Mortgage assistance is provided directly to the mortgage lender. Applications for this type of assistance may be filed for up to six (6) months after the disaster declaration. Mortgage assistance may be provided to eligible applicants, on a case-by-case basis, for a period not to exceed 18 months, or for the duration of the disaster-related financial hardship, whichever is less. Does FEMA's Mortgage Assistance Program impact the mortgage lender's relationship with its borrower/applicant? No. Mortgage lenders should continue to service their loans and conduct their day-to-day business with their borrowers without regard to whether that borrower is receiving mortgage assistance from FEMA. If a borrower does not make its mortgage payments notwithstanding their receipt of mortgage assistance from FEMA, mortgage lenders should seek payment from their borrower in accordance with their standard operating procedures. While FEMA imposes an obligation on an applicant to use mortgage assistance for only that purpose, FEMA is under no obligation to the mortgage lender to ensure that the mortgage is, in fact, paid as agreed. If an applicant seeks additional assistance (beyond the initial eligibility period), FEMA may request information on the status of the borrower's account. Page 2 of 3 _____________________________________________________________________ ATTACHMENT #1 Are all loans secured by an applicant's primary residence eligible for inclusion in the Mortgage Assistance Program? If a business loan is secured, in whole or in part, by the borrower's primary residence, this fact should be noted. Eligibility for payment through the Mortgage Assistance Program will be made on a case-by-case basis, however, this information is considered highly relevant to an eligibility determination by FEMA. Purchase money mortgages and home equity mortgages on a borrower's primary residence are generally eligible for payment through the Mortgage Assistance Program. Please indicate if the mortgage secures a home equity (or similar) loan. The Mortgage Assistance Program is intended to provide emergency assistance to individuals who, without such assistance, would lose their primary residence. If a mortgage secures property other than a borrower's primary residence, please indicate. Does FEMA share this information with other federal agencies? No. With very few exceptions (criminal law enforcement activity), the Privacy Act does not permit FEMA to share its applicant-related information with other agencies, including the IRS and the INS. Retyped by HUD 10/92. Page 3 of 3 _____________________________________________________________________ ATTACHMENT #2 MORTGAGEE'S FIRST NOTICE TO MORTGAGOR - HUD LETTER #1 ********************************************** * INSTRUCTIONS TO MORTGAGEES: ALL LANGUAGE * * IS MANDATORY -- NO CHANGES PERMITTED * ********************************************** (LETTERHEAD OF MORTGAGEE) FOR HOMEOWNERS WHO SPEAK SPANISH AVISO IMPORTANTE PARA LAS PERSONAS QUE HABLAN ESPANOL ESTA NOTIFICACION ES DE SUMA IMPORTANCIA, PUES AFECTA SU DERECHO A CONTINUAR VIVIENDO EN SU CASA. SI NO COMPRENDE EL CONTENIDO DE ESTA CARTA, OBTENGA UNA TRADUCCION INMEDIATAMENTE. SI USTED NO RESPONDE DENTRO DE SIETE (7) DIAS A PARTIR DE LA FECHA DE ESTA NOTIFICACION, USTED PUEDE PERDER SU CASA EN EL FUTURO. Dear _______________: YOUR SITUATION IS SERIOUS!! YOU COULD LOSE YOUR HOME!! You have not paid your mortgage payments for the months of ________________. You now owe a total of $_________________ in back payments and late charges. Unless you pay this amount immediately or come and work out a plan for repayment, we will begin foreclosure of your mortgage and you may lose your home. However, if you have missed your mortgage payments because of a condition which you could not control (such as illness, loss of your job, a major disaster ** such as a hurricane or flood, or some other serious condition that made it impossible for you to make your mortgage payment), the Department of Housing and Urban Development (HUD) may be able to help you. HUD may be able to accept an assignment of your mortgage. If HUD accepts an assignment, HUD would become your mortgagee. You would then make your mortgage payments to HUD and HUD would work with you in an effort to help you keep your home. We are now trying to decide if your case meets HUD's standards for assignment. If we decide that your case does meet the criteria, we will ask HUD to accept an assignment of your mortgage. If we decide that it does not meet the criteria, we will tell you why we made that decision and will provide you with further instructions to approach HUD on your own behalf prior to our beginning foreclosure. Page 1 of 2 10/92 _____________________________________________________________________ ATTACHMENT #2 We are enclosing a copy of HUD-92068F, Request for Financial Information. Although it is voluntary on your part to furnish the information, failure to provide the information may cause you to lose your home. This Form asks questions about your financial situation and asks why you have not been making your mortgage payments. In order for us to fairly consider your case, this completed Form must be sent to us with a postmark no later than __________. We suggest you make a copy of this Form before you sent it to us. If you need help in filling out the Form, please call us at (___) _________. You may also call any of the HUD approved housing counseling agencies on the enclosed list or, if you prefer, you may contact an attorney. If you meet certain income or eligibility requirements, you may be able to obtain legal assistance at minimal or no cost from the Legal Services Agency in your community. If we are forced to start foreclosure, additional attorney's fees and legal charges will be added to the amount you owe. Other letters concerning your situation will be forthcoming. If you are really interested in saving your home, WE URGE YOU TO ACT NOW. Sincerely, Enclosure Housing Counseling List ** If a major disaster occurs, the Federal Emergency Management Agency (FEMA) will publicize a toll-free telephone number in the disaster area. Call that number for information about FEMA's "mortgage assistance program." You may also visit FEMA's temporary Disaster Relief Office in the disaster area or call the permanent FEMA Disaster Relief Office that serves your area. *************************************************** * INSTRUCTIONS TO MORTGAGEES: FOR AN ENGLISH * * TRANSLATION OF THE SPANISH LANGUAGE WARNING, * * SEE HANDBOOK 4330.1 REV-3 * *************************************************** 10/92 Page 2 of 2 *U.S. Government Printing Office: 1992 - 342-362/60333