Puerto Rico – On August 15, 2018, the US Department of Housing and Urban Development issued Mortgagee Letter 2018-05 to update Loss Mitigation options for borrowers with mortgage loans insured by FHA and whose property and/or place of employment is located in the Presidentially-Declared Major Disaster Areas (PDMDAs) of Puerto Rico and the U.S. Virgin Islands, that the U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA) has declared to be eligible for Individual Assistance (Affected Counties) as a result of Hurricane Maria.
According to HUD, because of the devastation of Hurricane Maria, “mortgage delinquencies remain significantly elevated”. Therefore, they are modifying certain loss mitigation options to assist borrowers in default providing greater alternatives for Disaster Loss Mitigation. The purpose of the Mortgagee Letter 2018-05 is to reduce foreclosures and minimize losses to the Insurance Fund. Mortgagee are allowed to implement the amended Loss Mitigation procedures effective immediately but no longer than September 15, 2018. The 30-day Disaster Foreclosure Moratorium is effective immediately and applies to foreclosures pending initiation or already in process.
The tendency of the PR Judicial system regarding pending foreclosure actions during these moratoriums, in which the foreclosure property is the borrower’s primary residence, has been to refer the parties to the Mediation Center, all in compliance with PR Law 184 of 2012. At the Mediation Center, the mortgagees have the opportunity to advise and follow up with borrowers regarding Loss Mitigation available programs.