As communities in both Northern and Southern California deal with the aftermath of fires, many park owners are facing tough decisions about the rebuilding of their park and addressing water, ground and other major destructive issues to the infrastructure caused by the fires. However, what can sometimes be more difficult for an owner are the complaints and questions posed by the home owners and residents from within their parks following a natural disaster such as the California fires.
Following the November 2018 fires in California, homeowners now have additional options that park owners can recommend to them. In November 2018, the U.S. Department of Housing and Urban Development (HUD) announced it will provide federal disaster assistance to the State of California and provide support to homeowners and low-income renters forced from their homes in areas affected by wildfires. The major disaster declaration was issued for Butte, Los Angeles and Ventura counties. Families living in these counties will be afforded foreclosure relief and other assistance through HUD as follows: providing immediate foreclosure relief, making mortgage insurance available, and making insurance available for both mortgages and home rehabilitation available.
HUD is providing immediate foreclosure relief to the above-mentioned residents through an automatic 90-day temporary stay on foreclosures initiated on Federal Housing Administration (FHA) insured mortgages in the counties of Butte, Ventura and Los Angeles. HUD has instructed FHA lenders to use reasonable judgment in determining who is an “affected borrower.” Lenders are required to reevaluate each delinquent loan until reinstatement or foreclosure and to identify the cause of default. Home owners are recommended to contact their lenders to determine eligibility.
An alternative option for the families of these counties is mortgage insurance for disaster victims pursuant to section 203(h) which allows the FHA to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home. The section offers a number of alternative features including: a no down payment requirement and 100 percent financing for the borrower (though closing and other costs need to be covered), Mortgagees collect from the borrowers an up-front insurance premium (which may be financed) at the time of purchase as well as monthly premiums, and finally to make sure that its programs serve low and moderate income people, FHA sets limits on the dollar value of the mortgage.
The third alternative under this declaration is rehab mortgage insurance under section 203(k) which enables homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home. These homes need to be at least a year old. There are additional requirements including a minimum rehabilitation cost of at least $5,000 and the property must fall within the FHA mortgage limit for each county. The intent is to make the process relatively convenient for lower income borrowers.
Park owners and park managers can present displaced park residents with these various options, whether the residents will be asked to relocate outside the park or the park is rebuilding and the home owner will be returning. This can help elevate the questions and concerns from residents. For more information on these options feel free to contact our office.
We understand there are legal and business related considerations to balance, and we can help you navigate these concerns. As a park owner if you would like to discuss your options following the fires, please feel free to contact Haley Hansen, Esq. (email her or 415-957-2325).