FHA responds to Helene, Milton by granting temporary waivers for the rehabilitation loan program
The Federal Housing Administration (FHA) this week announced two temporary policy waivers as the response to Hurricanes Helene and Milton continues.
The FHA’s 203(k) Rehabilitation Mortgage Program currently has a requirement that “when a repair is deemed ‘major,’ it will no longer be eligible for financing” as part of the 203(k) limited option, “if the repairs restrain the borrower from occupying the property for more than 15 days.”
This requirement has been temporarily removed as part of the ongoing response to the successive disasters in the Southeast.
As a result of Helene and/or Milton, “many properties have been severely impacted or destroyed and are now in serious need of rehabilitation and/or repair,” the agency said. “FHA believes that a temporary waiver from the definition of ‘major repair’ with respect to the 15 days (or 30 days after November 4, 2024) required for repair completion is critical” to ensure homeowners rebuild in these presidentially declared Major Disaster Areas (PDMDAs).
The temporary waiver, issued on Monday, applies to FHA-insured restricted 203(k) mortgages closed on or before August 31, 2025.
Importantly, the temporary waiver impacts the 15-day occupancy requirement in the specified disaster areas, but the requirement that “at least one borrower occupy the property within 60 days remains the same,” FHA added.
Another policy that applies to PDMDAs typically requires “damage inspection reports” for properties in these areas. These reports must be made after the closing date of the “incident period” – the date(s) on which a disaster occurred – or at least 14 days from the start of an incident period, whichever is earlier.
A new temporary waiver of a 14-day second incident period applies to inspection reports from the Hurricane Milton disaster area, which was officially declared on October 11.
But because of the responses to both Helene and Milton – which have “severely affected similar regions within a fortnight period” – the current policy requiring separate fourteen-day waiting periods for damage inspections and reports after each event has “created the potential for extensive repair/rehabilitation delays for homebuyers and sellers.”
Since the Federal Agency for Emergency Management (FEMA) is currently deployed in these disaster areas, FHA believes there is “sufficient stability and risk mitigation to eliminate the requirement for a second 14-day waiting period for inspection and damage reports associated with Hurricane Milton PDMDA.”
This exemption only applies to the period of 14 days for drawing up the damage inspection report. Other requirements – including the need to “prepare a damage inspection report and other inspection and repair escrow requirements for all properties with current mortgages or notes in the PDDMAs” – remain the same.
The exemptions announced this week are effective immediately.
