Reverse Mortgage In A Disaster Area
A HECM can still close on a home in a presidentially declared disaster area. The home must be checked for damage first, and any damage must be repaired.
What the damage inspection covers
HUD sets the inspection rules for any HECM pending closing in a declared disaster area designated for individual assistance.
- An onsite damage inspection report must identify and quantify any damage to the home.
- The report includes interior and exterior photographs.
- An FHA Roster Appraiser must complete it, even if the inspection shows no damage.
- It must be dated after the FEMA incident period, or 14 days from the incident period start date, whichever is earlier.
- The appraiser may choose to perform a remote observation of the property.
- If the appraisal’s effective date is on or after that required date, a separate damage inspection report is not needed.
Utilities can still be off
Small damage can use a set-aside
Appraisals can stay valid longer
Licensed contractors do the repairs
Foreclosures pause after a declaration
Insurance money goes to repairs
How Damage Changes The Closing
The path to closing depends on whether the home was damaged and how badly.
If the inspection finds no damage, the HECM can close with the initial damage inspection report in the file. If damage is under HUD’s dollar limit and the home is habitable, repairs can be finished before closing. Or a repair set-aside can be set up before closing, with a Repair Rider.
If damage is at or above that limit, or the home is not habitable, the HECM does not close until repairs are done. In those cases HUD requires both an initial and a final damage inspection report. All damage, regardless of amount, must be repaired and the home restored to pre-loss condition.
Our reverse mortgage program adds its own appraisal rule. If the appraisal was completed on or before FEMA’s incident period end date, the original FHA appraiser must complete an appraisal update report. If the appraisal was completed after that date, a full appraisal with an exterior and interior inspection is required.
Why choose Saxton for a reverse mortgage after a disaster
This page is for homeowners, and adult children helping a parent, whose home is in an area the President has declared a major disaster.
We Check What Applies First
We confirm whether your appraisal date already covers the inspection window. If it does, HUD does not require a separate damage inspection report.
Damage Is Measured First
The inspection report identifies and quantifies any damage. The amount found, and whether the home is habitable, decides whether repairs can wait until after closing.
Every Repair Must Be Finished
HUD requires all damage to be repaired, regardless of amount. The work is done by licensed contractors or under local requirements.
Your Appraisal May Still Count
When an inspection finds damage, HUD extends appraisal validity from 180 days to a maximum of one year. An appraisal older than one year must be replaced.
Buying A Home Works Differently
On a HECM for Purchase that has not closed in a declared disaster area, repairs must be completed before closing. The cost of those repairs is the seller’s responsibility.
Protections Continue After Closing
If a major disaster is declared later, HUD requires a 90-day foreclosure moratorium in that area, with limits. Insurance claims must be filed and settled as quickly as possible.
Hear From Homeowners Like You
Frequently Asked Questions
Common questions about reverse mortgages on homes in declared disaster areas.
It is possible if the home meets HUD’s inspection and repair rules. An FHA Roster Appraiser must complete a damage inspection report even if there is no damage, unless the appraisal is dated late enough to cover the inspection window. If no damage is found, the HECM can close with the inspection report in the file.
The damage inspection report includes interior and exterior photographs. The appraiser may, at their discretion, perform a remote observation of the property. Under our reverse mortgage program, an appraisal completed after FEMA’s incident period end date must be a full appraisal with an exterior and interior inspection.
FHA does not require the appraiser to make sure utilities are on during the damage inspection if they have not yet been restored for the area.
Sometimes. If damage is under HUD’s dollar limit, the home is habitable, and there are enough funds for a repair set-aside, the set-aside can be set up before closing with a Repair Rider. On a HECM for Purchase, the seller must finish repairs before closing. Under our reverse mortgage program, repairs must be completed within six months from the date of closing.
HUD requires a 90-day foreclosure moratorium beginning on the date of the disaster declaration. It applies only when the loan is due and payable for reasons other than the death of the last remaining borrower and is not in a deferral period. After it ends, the servicer cannot pursue foreclosure if that would put full recovery of a hazard or flood insurance settlement at risk.
Proceeds for personal property, temporary housing, and other transition expenses must be released to you promptly. The servicer cannot hold them back to cover an arrearage, such as a property charge advance, without your written consent. Proceeds for home repairs are released after the servicer confirms enough funds are available and approves a viable repair plan.
Under National Flood Insurance Program rules, a home is substantially damaged when restoring the structure would cost 50 percent or more of the structure’s market value before the damage. The servicer must make sure those repairs meet federal building elevation standards, including FEMA’s, and any higher state or local standard.
Saxton Mortgage does. A HECM can still close on a home in a presidentially declared disaster area. If the damage inspection finds no damage, the HECM can close with the inspection report in the file.
Find out what you qualify for
Tell us about your home and the disaster declaration in your area, and we will check how it fits our program.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.