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Posted October 2nd, 2018

      FHA Disaster-Related Policy Waiver Issued in the Presidentially-Declared Major Disaster Area of Lake and Shasta Counties Due to the California Wildfires and High Winds Declaration

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 August 4, 2018, Presidentially-Declared Major Disaster Area (PDMDA) due to the California Wildfires and High Winds declaration (DR-4382) in Lake and Shasta Counties.

  • 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 wildfires, and the high winds that fanned them, in Lake and Shasta Counties have stabilized to the extent that further damage to the properties appear 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 areas could be added until the Incident Period has closed.
  • As a result, today, FHA issued a waiver for properties in Lake and Shasta Counties, CA, regarding the timing of the required inspection, allowing damage inspections to be completed beginning October 2, 2018, for properties located in the PDMDA.    
  • 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.  

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.