The Department of Housing and Urban Development (HUD) announced Thursday a critical rule waiver for FHA-backed loans to assist homeowners affected by the recent California wildfires. HUD Secretary Scott Turner confirmed the change, which offers temporary relief from foreclosure procedures for borrowers in declared disaster areas.
The waiver, effective April 1, 2025, suspends early payment default (EPD) review requirements for certain FHA-insured mortgages. Specifically, the exemption applies to properties in Presidentially Declared Major Disaster Areas (DR-4856-CA) impacted by wildfires and straight-line winds. Eligible loans must have closed before January 7, 2025, and entered early payment default between February 1 and July 31, 2025.
Under normal FHA rules, lenders are required to review any loans that fall into default within the first few months of closing. This change means homeowners will not face that process during the specified time frame, giving them a critical window to recover without risk of immediate foreclosure.
Lenders must still meet all other servicing and loss mitigation requirements. That includes offering appropriate FHA relief options, reporting delinquencies, and maintaining compliance with FHA standards for mortgage servicing. The move provides targeted support to residents grappling with financial stress caused by fire damage and displacement.
Secretary Turner visited fire-damaged neighborhoods in Pacific Palisades and Altadena in March. He pledged continued federal support and emphasized the importance of protecting homeownership in crisis situations. However, additional Congressional action may be needed to authorize low-interest rebuilding loans that would supplement insurance payouts and cover unmet construction costs.
The regulatory relief underscores the Biden administration’s reliance on federal disaster declarations to unlock assistance, while HUD continues to explore other options to support families and communities facing long-term recovery challenges.
