HUD to Assist Homeowners Facing Problem Drywall

[Tamara R Pearlman]

HUD to Assist Homeowners Facing Problem Drywall
Temporary relief available to make home repairs affordable for at-risk
borrowers
by portal.hud.gov

WASHINGTON – The U.S. Department of Housing and Urban Development
today announced that FHA-insured families experiencing problems
associated with problem drywall may be eligible for assistance to help
them rehabilitate their properties. In addition, HUD’s Community
Development Block Grant (CDBG) Program may also be a resource to help
local communities combat the problem.

FHA is reminding its approved lenders that they are to offer special
forbearance for borrowers confronted with the sudden effects of
damaging drywall products in their homes including the financial
hardship associated with related home repairs.

“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,” said 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 that is 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 default;
a period during which the borrower is only required to make their
regular monthly mortgage payment before beginning to repay the
arrearage; or
a repayment period of at least six months.
HUD is instructing lenders that no late fees are to be assessed 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 make a determination as to 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 address the rehabilitation expenses associated with
problem drywall. Historically, CDBG has helped to support local
efforts to rehabilitate homes through grants, loans, loan guarantees,
and other means. In addition, CDBG may also support the following
activities:
Code enforcement.
Acquisition
Clearance and remediation activities
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 this drywall.

Last June, as part of the National Day of Service, HUD Secretary Shaun
Donovan welcomed a New Orleans family back to their home after the
installation of problem drywall had further delayed their return
following Hurricane Katrina. Then, in October, Donovan toured another
home in Boyton Beach, Florida to see for himself the effects of
problem drywall. The family’s air conditioner condenser coils were
corroded, the home smelled of sulfur, and the family’s 16-month-old
daughter suffered from allergies and upper respiratory problems, which
the family believed were associated with home’s drywall.

CPSC, in partnership with the CDC, the Environmental Protection Agency
(EPA), U.S. Customs and Border Protection and HUD is coordinating the
federal government’s response into which particular drywall products
pose a risk to human safety and health and structural integrity. All
related reports and findings are available online at the CSPC Drywall
Information Center.

http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2009/HUDNo.09-237