California Wildfires: Eligibility for SBA Disaster Loans and Disaster Recovery Centers

While we still await updates, these California fires are being named the deadliest in the state’s history. At time of writing, the number of deaths from the Camp Fire in Northern California has risen to 77 while over 900 people remain missing. According to recent updates by Cal Fire, the Camp Fire has burned approximately 151,000 acres, causing over 40,000 residents to abandon their homes and find safety.

The Woosley Fire has burned more than 96,000 acres and numerous homes, and the Hill Fire in Ventura County has burned over 4,000 acres, including RVs and outbuildings. While the Hill Fire is fully contained, the Camp Fire is 66 percent contained and the Woolsey Fire is 94 percent contained. No matter how close your home or business is to wildland areas, it’s always best to be prepared in case of emergency evacuation, prepare your home to mitigate potential for damage, and have knowledge of your local and national recovery resources.

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SBA Disaster Assistance Available for Residents Affected by Hurricane Michael

The U.S. Small Business Administration (SBA)’s Administrator Linda McMahon announced that the SBA will provide disaster loan assistance to Florida businesses, homeowners and renters affected by the recent Hurricane Michael, following the Presidential disaster declaration for Mexico Beach, Florida and nearby areas.

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Post-Crisis Small Business Bank Lending at a Slow Crawl

A recent report from the U.S. Small Business Administration (SBA)’s Office of Advocacy assesses changes in bank lending to small businesses in comparison to levels during the financial crisis. Following a review of banks of varying sizes and financial health, findings reveal a slow recovery in the small business loan market and a more pronounced growth in the total business loan market.

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Democrats and Republicans Introduce Legislation to Nullify CFPB Rule

House Democrats and Republicans have introduced legislation to stop the recently finalized Consumer Financial Protection Bureau (CFPB) small dollar lending rule. The rule, which was issued by former CFPB Director Richard Cordray, aimed to protect consumers from the negative consequences of “payday loans” which are usually small-dollar amounts that are due in full before the borrower’s following paycheck.

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Reducing Losses on FHA Defaulted Loans

Servicing FHA Loans continues to be challenging and, in many instances, includes high losses on default liquidated loans. While FHA delinquencies have greatly improved compared to post crisis delinquency, there are still over 7.8 million outstanding FHA insured loans with delinquency rates that rose as high as 11.25 percent according to the FHA Single Family Loan Performance Trends report published by HUD this past January.

When working with FHA Loans in default, there are many key time frames that must be met in order to minimize losses, beginning as soon as the date the loan was last contractually current, and continuing throughout the claim filing process. In many cases just missing the start of a foreclosure action by one day can result in increased losses of thousands of dollars. Failure to meet all time frames will not only result in interest curtailments, but ultimately the curtailment of advances as well. These losses can be further exacerbated depending on the type of pool, the Servicer’s ability to limit interest rate spreads, and time required to resolve. Additionally, if there was a missed time frame, FHA will only pay debenture interest to the point of the interest curtailment. After the interest curtailment, HUD will no longer pay debenture interest on the Unpaid Principle Balance.

To put things in perspective, if an FHA loan has an Unpaid Principle Balance of $150,000 with an interest rate of 3.5 percent, and you miss the first legal action for foreclosure, and it takes an additional 24 months to convey, the Servicer stands to lose $10,500 in interest alone. In addition to interest curtailments, the Servicer must fully comply with the allowable fee schedule for all legal actions and property preservation expenses. Overhead costs as well as any fees or costs associated with clearing title issues are not reimbursable or recoverable through a claim to HUD.

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