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 May 11, 2018, Presidentially-Declared Major Disaster Area (PDMDA) on the Big Island of Hawaii, stemming from the Kilauea Volcanic eruption.

• 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 Lava Flow Zones 3-9 on the Big Island of Hawaii have stabilized to the extent that further damage to the properties appears 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 lava flow zones could be added until the Incident Period has closed.
• As a result, today FHA issued a waiver for properties on the Big Island of Hawaii in Lava Flow Zones 3-9, regarding the timing of the required inspection, allowing damage inspections to be completed beginning September 4, 2018, for the PDMDA on the Big Island of Hawaii.
• 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.
• The Hawaii “Kilauea Volcanic Eruption” waiver is posted here.

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.

New FEMA Emergency Declarations:

• Alaska Flooding (DR-4391), Incident period: May 11, 2018 to May 13, 2018, Major Disaster Declaration declared on September 05, 2018
• Minnesota Severe Storms, Tornadoes, Straight-line Winds, And Flooding (DR-4390), Incident period: June 15, 2018 to July 11, 2018, Major Disaster Declaration declared on September 05, 2018
• Arizona Severe Storms, Flooding, And Landslides (DR-4389), Incident period: July 11, 2018 to July 12, 2018, Major Disaster Declaration declared on August 31, 2018
• Georgia Hurricane Irma (DR-4338), Incident period: September 07, 2017 to September 20, 2017, Major Disaster Declaration declared on September 15, 2017