WILMINGTON — Several mortgage lenders in the Wilmington area are offering a disaster relief loan called the FHA 203(h) for those whose properties — either owned or rented — lie in federal disaster areas and were damaged or destroyed so severely by Hurricane Florence that they must rebuild, replace, or relocate.
IN PICTURES: A flooded neighborhood along the Black River
On September 14, the day Florence made landfall, New Hanover, Brunswick, and Pender joined five other North Carolina counties in the coastal region designated for federal disaster assistance. Within two weeks, 19 additional counties in the state were added to the FEMA disaster zone.
The mortgages are backed by a U.S. Department of Housing and Urban Development (HUD) program called Section 203(h). The program allows the Federal Housing Administration (FHA) to insure mortgages offered by lenders to victims of a major disaster who have either lost their homes and are rebuilding or who are buying another home.
Local loan options
On Monday, HUD Secretary Ben Carson will accompany Secretary of Labor Alexander Acosta to Wilmington to meet workers, job creators, civic leaders, and first responders.
Representatives from Wilmington lenders including Equity Resources, Atlantic Bay Mortgage, Alpha Mortgage, and Guaranteed Rate confirmed that their companies are now offering the 100% financed loan, which requires no down payment.
To be eligible, applicants’ homes must be “destroyed or damaged to such an extent that reconstruction or replacement is necessary,” according to the HUD website.
Equity Resources mortgage specialist Samantha Morris said victims must submit claims inside the loan application process’ one-year window, based on the date Florence was declared a disaster by FEMA, meaning they have until September 14, 2019.
“A lot of people think this is only for those who already own a home, but that’s not the case,” Morris said. “If you’re renting and you have nowhere to go, this would allow those who don’t have money for down payment to purchase a home at 100% financing. You wouldn’t be able to do that before … Most of the time, you have to put a minimum of 3 to 3.5 percent down.”
Morris’ boss, Equity Resources Wilmington branch manager Pamm Jones, said the 203(h) program is for primary residences only, but borrowers do not have to buy in the same area.
“The underwriting guidelines are more relaxed and lower credit scores are accepted,” Jones added.
Evicted apartment tenants
The 203(h) would be a viable option for Wilmington residents who have been kicked out of apartment complexes damaged by Florence, Morris said.
According to an email received Saturday afternoon from Cape Fear Volunteer Center CEO Annie Anthony, “Wilmington has seven apartment complexes that have been declared unsafe to live in. These residents are in shock.”
Her organization’s next focus will shift to residents of Market Street North Apartments who have until October 22nd to be out of their homes, according to Anthony.
Before rolling out the 203(h), Morris said that her company offered only one product — a doctor’s loan — at 100% financing, underlying a rare opportunity for those hit hard by floodwaters along the Cape Fear and Black River or those in Wilmington communities stricken by massive fallen trees.
Morris also said that in each county different limits are established for FHA loans: while loans in New Hanover, Brunswick, and Pender are capped at $294,515, counties like Camden ($679,000) and Currituck ($458,000) have higher average home values, and in these places “they have upped the ante.”
For higher value homes, look to renovation loans
Bryan DeWeese, a sales manager for Towne Bank in Raleigh, said that most of his company’s clients in the tri-county area own homes in Wilmington, Leland, Ocean Isle, and Carolina Beach.
DeWeese said that although the 203(h) is a better product for those who suffered total losses in places like Pender County — where the 2016 median household income was $46,580 and the median property value was $160,300, according to the U.S. Census Bureau — renovation loan products are “probably going to be more widely sought after.”
More affluent coastal communities affected by Florence like Wrightsville Beach, where the 2016 median household income was $77,232 and the median property value was $742,100, fall well outside FHA loan limits, DeWeese said.
“We haven’t ruled out offering the product, we’re just not sure that a better offering for a majority of our customers isn’t going to be our existing products, whether it be a construction-to-permanent loan for somebody who faces a total rebuild, or a renovation loan to help with a water-damaged house they currently own.”
“You can tell by driving around [Wilmington], the majority of what you’re seeing is more cosmetic damages — dry wall, carpet, things of that nature. The winds weren’t as catastrophic as the flooding, so there weren’t as many completely lost homes,” DeWeese said.
To reach a larger portion of the population in communities around Wilmington and along the coast, DeWeese said Towne Bank will focus more on their existing product mix, from FHA and conventional renovation loans that would help people rebuild to construction-to-permanent loans for “people outside the FHA loan limits who did have houses destroyed on the beach.”
Reporter Mark Darrough can be reached at Mark@Localvoicemedia.com