The U.S. Department of Housing and Urban Development (HUD) announced over the holidays that FHA-insured families experiencing problems associated with toxic drywall might be eligible for assistance to help rehabilitate the properties. In addition, HUD’s Community Development Block Grant (CDBG) Program could help local communities combat the problem.
“We’re instructing our FHA mortgage lenders nationwide to extend temporary relief to allow these families time to remove problem damaging drywall and repair their homes,” says FHA Commissioner David Stevens. “We want to remove additional pressures for these families as they find solutions to allow them to return to a safe, decent and sanitary home.”
FHA Type 1 Special Forbearance (noted in Mortgagee Letter 2002-17) provides relief not typically available under an informal forbearance or repayment plan. This relief provided can include one or more of the following:
• suspension or reduction of payments for a period sufficient to allow the borrower to recover from the cause of a default
• a period during which the borrower must make a regular monthly mortgage payment before repaying the arrearage
• a repayment period of at least six months
HUD has told lenders not to assess late fees while the borrower is making timely payments under the terms of the Special Forbearance plan. The total arrearage for a Type 1 Special Forbearance cannot exceed 12 months of delinquent payments. Lenders can review borrower applications and determine the most appropriate loss mitigation tool, including loan modification, partial claim or FHA HAMP.
Any questions or clarification regarding the Type 1 Special Forbearance should be directed to the HUD National Servicing Center at (888) 297-8685.
HUD’s CDBG Program is another resource to help states and local communities. Historically, CDBG has supported local efforts to rehabilitate homes through grants, loans, loan guarantees, and other means. In addition, CDBG may also support code enforcement, acquisition, clearance and remediation activities and relocation.
All CDBG-assisted activities must meet one of the program’s three national objectives: Provide benefit to low- and moderate-income persons; Eliminate slums or blighting conditions; or address an immediate threat to the health or welfare of the community.
The Consumer Product Safety Commission (CPSC) reports that more than 2,360 homeowners in 35 states and the District of Columbia (primarily in Florida, Louisiana and Virginia) have filed complaints of possible drywall-related problems, including damage to electrical wiring, plumbing, utilities and a variety of health concerns.
The drywall emits sulfur gases. One of these, hydrogen sulfide, which corrodes copper, was found at higher levels in homes with the drywall. Copper sulfide corrosion damage has been found on wiring, pipes and household appliances in homes with the drywall. In addition, the Centers for Disease Control and Prevention (CDC) is examining possible health consequences related to the drywall.
Related reports and findings are available online at the CSPC Drywall Information Center. (http://www.cpsc.gov/info/drywall/index.html).
© 2010 Florida Realtors®
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