Proctor’s compliance team is monitoring federal and state requirements for Hurricane Harvey assistance and will provide updates as they develop.
Please see below for a summary of federal and state requirements.
TEXAS DEPARTMENT OF INSURANCE
The Texas Department of Insurance (TDI) released multiple bulletins in response to Hurricane Harvey, including:
- B-0009-17 – Premium Payments Grace Period, which encourages carriers to provide relief to policyholders in counties affected by the Hurricane. The Bulletin asks carriers to temporarily suspend premium payment requirements to allow continuing insurance coverage. The bulletin does not provide an automatic moratorium for all policy holders in an affected area, so policyholders should reach out to their insurance carriers to receive the benefit of this Bulletin.
- B-0011-17 – Claims Adjusting and Adjusters, reminds carriers that the Texas Insurance Code authorizes carriers to immediately use nonresident and emergency adjusters to handle claims and encourages carriers to use all available means to provide prompt and immediate relief to policyholders.
- B-0015-17 – Property and Casualty Rating and Underwriting, gives the opinion of the TDI that it’s inappropriate for insurers to re-rate, cancel, nonrenew, or refuse to provide coverage due solely to a policyholder’s status as a victim or evacuee of Hurricane Harvey.
- B-0017-17 – Recommending Building and Repair Contractors, reminds all persons, including adjusters, building and repair contractors, and insurers, that an insurer or its rep, or any other person, may not misrepresent the terms and provisions of a policy and that persons insured under a homeowners or dwelling policy are entitled to have their home repairs by the person of their choice.
- B-0018-17 – Denial of Wind Losses, encourages insurers who deny coverage for wind losses to inform policyholders of potential coverage under the TWIA if the loss occurred in the TWIA coverage area.
- B-0019-17 – Vacancy Provisions, urges insurers to provide relief to those residents and policyholders who have been temporarily displaced, including the suspension of any vacancy provisions in the policy to allow continuing insurance coverage. This bulletin is not intended to limit the application of a vacancy provision for policyholders who have moved permanently from their home or business.
The full list of Bulletins can be found here.
Servicers should be aware that both Fannie Mae and Freddie Mac issued reminders regarding the Servicer’s responsibility to provide assistance to borrowers affected by disasters. These publications call attention to the following mitigation options:
- Initial period of forbearance to affected borrowers, with a potential extension subsequent to investor approval.
- Delay or suspension of foreclosures in affected areas
- Temporary suspension or reduction in mortgage payments for up to ninety days if the servicer believes the disaster has negatively impacted the value or the borrower’s ability to pay or reside in the home
- Temporary relief may be granted by the Servicer despite lack of immediate contact with the impacted homeowner
- Waiving assessments of penalties or late fees against homeowners with disaster-damaged homes
- Refraining from reporting forbearance or delinquencies caused by the disaster to the credit bureaus
- Consideration of standard relief policies, such as forbearance or mortgage modifications, or borrowers who are employed in eligible disaster areas but reside in unaffected areas
Lenders originating loans that will be sold to Fannie Mae must verify the condition of the property if it is within the area affected by the hurricane.
The following are links to Fannie and Freddie’s press releases regarding Hurricane Harvey:
FHA Servicers must also take into account that when the President declares a major disaster, the Servicer must implement for each designated area the procedures of the FHA Single Family Housing Policy Handbook (Section III. Servicing and Loss Mitigation, A. Title II Insured Housing Programs Forward Mortgages, 3. Programs and Products, c. Presidentially-Declared Major Disaster Areas). Those procedures include a moratorium on foreclosures following the Disaster Declaration. The foreclosure moratorium is effective for a 90-Day period beginning on the date of the Disaster Declaration for that area (HUD may communicate further specific guidance for extension of moratorium periods for individual disasters).
Additionally, the OCC, the Fed, and the FDIC (Agencies) issued a statement recognizing the impact of Hurricane Harvey and that the Agencies will provide regulatory assistance to affected financial institutions. The agencies also encourage financial institutions to work with borrowers in affected communities, stating that sensible adjustments to loans in affected communities will not be subject to examiner criticism. The Agencies statement can be found here.
Proctor will continue to monitor federal and state requirements for Hurricane Harvey assistance and will provide updates as they develop.