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WBK Industry News - Federal Regulatory Developments

FHA Issues Disaster Area Policy Waiver for the Big Island of Hawaii

On September 4, 2018, FHA issued a policy waiver to permit lenders to begin conducting damage inspections for new FHA loans in lava flow zones 3-9 in the Presidentially Declared Major Disaster Area on the Big Island of Hawaii, even though the FEMA incident period for in the Kilauea volcanic eruption has not closed.

In the absence of a waiver, FHA’s policy for mortgage insurance requires that a property damage inspection be performed after FEMA closes the disaster incident period.  According to FHA, it believes that Lava Flow Zones 3-9 on the Big Island of Hawaii have stabilized and further damage to properties is unlikely, despite the incident period not being closed.

As a result, FHA issued a waiver for properties in Lava Flow Zones 3-9, permitting property inspections to be completed beginning on September 4, 2018, prior to the close of the disaster incident period.  Lenders remain responsible for exercising prudent lending practices and must ensure that mortgages submitted to FHA for insurance comply with FHA eligibility requirements, and any property condition requirements related to claims processing.

FHA’s announcement is available here.