In August of 2023, wildfires ravaged parts of Hawaii, including Lahaina, resulting in massive damage to property and loss of life.
On Friday, August 18, 2023, the Department of Veterans Affairs issued a press release announcing mortgage relief for those who have VA mortgages living in the affected areas. There are some 100 thousand veterans living in Hawaii and more than 35 thousand active-duty troops stationed in Hawaii.
VA Home Loan Guidance on Home Damaged by Hawaiian Wildfires
If you were affected by wildfires in Hawaii, you should know that at press time, VA policy is to “encourage” VA lenders to extend loan forbearance to those with homes damaged or destroyed in the Hawaii wildfires.
VA advice to these lenders? “Careful counseling with borrowers should help determine whether their difficulties are related to this disaster or whether they stem from other sources that must be addressed.”
VA Requests Lenders Offer Foreclosure Moratorium Options
A VA press release announcing Hawaii wildfire policy notes that while it’s ultimately up to the lender to decide, “VA has requested on its website that holders establish a 90-day moratorium from the date of a disaster declaration on initiating new foreclosures on loans affected by major disasters.”
Borrowers should know that there are also VA requests to its participating lenders to waive disaster-related late charges and avoid reporting delayed or late payments to the credit bureaus.
In return for offering the borrower more flexibility, the Department of Veterans Affairs pledged to its participating lenders. “VA will not penalize affected servicers for any late default reporting to VA as a result” of the lender being flexible with VA borrowers in the aftermath of the disaster.
What to Know About VA Loans and Natural Disasters
It is extremely important to know that you must coordinate with your lender if your house was damaged or destroyed in the wildfires in Hawaii or any other type of incident.
Even if your house cannot be inhabited, assuming you can stop making payments is not safe. Discuss your circumstances with your loan officer as soon as possible.
- Do not allow insurance agents to rush you into a decision about your property. Have the damage inspected and decide for yourself, based on the results, whether to repair, replace, or take other action.
- As mentioned above, you should not stop making payments on your VA mortgage without coordinating with your lender.
- You should take pictures and fully document your property’s damage to or destruction for insurance purposes.
- Some borrowers’ income may be severely affected by a natural disaster. The loss of a business, business assets or even business records can complicate recovery from the incident. If you anticipate any trouble making payments in the recovery phase, contact your lender and explain your circumstances.
Certain loan options may be available to you if the President of the United States declares the affected regions to be federal disaster areas. You may qualify to apply for a government-backed rehabilitation loan to repair or replace the home, but you’ll need to discuss this option with a participating lender.
You should check three resources during your recovery from the disaster. One is the VA official site at VA.gov in the VA loans section.
The other is the Federal Emergency Management Agency (FEMA) which offers help to those recovering from disasters. There may also be help from the Small Business Administration, which offers loans to homeowners who have experienced a disaster.
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