Presidentially-declared Federal Disasters

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Please Note: Mortgagee Letter 05-13 advises that the Federal Emergency Management Agency (FEMA) no longer provides the Mortgage Assistance Payments referred to in Mortgagee Letters 2004-37 , 2004-36, and 2004-32. Mortgagees should no longer refer mortgagors to this program.

Mortgagees are reminded that requirements for servicing mortgages in Presidentially Declared Disaster Areas are provided in Chapter 14 of HUD Handbook 4330.1, Rev-5, Administration of Insured Home Mortgages, restated most recently in Mortgagee Letter 05-33. A 90 day moratorium on foreclosure is automatically imposed on properties actually affected by the disaster. Effective with Mortgagee Letter 98-20, the Department ceased issuing separate Mortgagee Letters for each disaster declaration. Rather, when the President declares a disaster, the mortgagee must check with the Federal Emergency Management Agency (FEMA) to obtain the specific affected counties and corresponding declaration dates. This information can be found at http://www.fema.gov/news/disasters.fema or by calling the local FEMA office.

The Department is aware that there may be situations where the mortgagor's property is not affected by the disaster, but the mortgagor's financial viability is affected. Where this has occurred and the mortgagor has provided supporting evidence of the financial impact, mortgagees shall also include those mortgages in the moratorium.

Questions regarding a 90 day moratorium on foreclosures, or any other servicing provisions on properties directly affected by Presidentially-declared disasters should be directed to HUD's National Servicing Center.

* Please note that Mortgagee Letter 99-11 changed the Pre-foreclosure sale (PFS) minimum ratio of as-is appraised value to unpaid balance to 65 percent for properties affected by Presidentially declared disasters. The PFS minimum ratio was reduced to 63 percent for any homeowner eligible for Loss Mitigation by Mortgagee Letter 00-05; and to 58 percent for properties affected by Presidentially declared disasters per Mortgagee Letter 01-07.

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