Hurricane Impacting Loan Funding
As the industry continues to cope with the property damage from Hurricane Irma, many prospective home buyers were caught in limbo. Each loan type and each agency has different funding requirements with respect to a federally-declared natural disaster zone. A segment of Florida home buyers that were planning on financing through a FHA recently experienced a delay in closing and some confusion. One of the requirements of funding a FHA loan after a disaster is that a reinspection is completed after the established end date. Once that occurs, lenders can quickly reassess the property condition and finalize the funding and closing process.
The suspension was disrupting borrowers and slowing transaction time throughout the state of Florida. The affected counties include: Alachua, Baker, Bradford, Brevard, Broward, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Gilchrist, Glades, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lafayette, Lake, Lee, Levy, Manatee, Marion, Martin, Miami-Dade, Monroe, Nassau, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Suwannee, Union, and Volusia.
According to the Florida Housing Finance Corporation, “US Bank has made the decision to pause the funding of loans in Florida.” Due to this decision, there may still be a potential delay in the funding of Florida bond loans.
Re-inspection requirements may vary based on the investor. Currently, FNMA and FHLMC are allowing re-inspections after the declaration date is announced. FHA had previously indicated that there must be an incident end date unannounced be FEMA before a re-inspection can be completed. As of this morning, FEMA has not issued an end of disaster date for various affected regions of Florida. Despite that, as of yesterday, FHA did issue a waiver allowing lenders to begin the reinspection process. The good news for FHA borrowers is that the delays experienced in acquiring their new homes should subside soon.
Sources: FEMA, Florida Housing Finance Corporation, HUD, MBA