HUD Homes and Other Options Available
in Presidentially-Declared Disaster Areas

Real Estate Owned (REO) Properties available for purchase at a discount

Since the week of May 1, 2006, HUD homes have been made available for purchase by hurricane evacuees at a discount.

Procedures for Making Real Estate Owned (REO) Properties temporarily available to Disaster Victims

The Federal Emergency Management Agency (FEMA) website (, lists counties affected by a Presidentially-Declared disaster and the corresponding declaration dates.

Under a Memorandum of Understanding (MOU) between the Department and FEMA, acquired properties must be made available to temporarily house victims in areas declared by the President to be major disaster areas. Pursuant to the terms of the MOU, following the declaration of a disaster, FEMA must request that HUD implement the MOU, as follows:

  1. FEMA Request for a List of Available Properties. FEMA will request a list of available properties. Eligible properties are habitable, not under lease or sales contract nor committed to another use or program, and ready for immediate occupancy.
  2. Distribution of List
    • FEMA will provide lists from their resource bank of available housing including HUD-owned properties to disaster victims who are having difficulty finding rental housing that meets their needs. The disaster victims must locate their own housing.
    • HUD DOES NOT hold the eligible properties off the market. As necessary, FEMA may request updated lists.
  3. Leasing to Disaster Victims. HUD's Management and Marketing Contractor will rent directly to the disaster victim, as follows:
    • LEASE: the occupant must execute a lease, Form HUD-9532.
    • TERM: The term of the lease is month-to-month only, with assistance not to exceed one year and subject to termination when the REO Director determines the emergency is over.
    • MAINTENANCE AND OPERATING COSTS: HUD is responsible for payment of property taxes and maintenance costs normally required of a landlord pursuant to local law.
    • RENT: The rental rate will be set by the REO Director at the amount deemed appropriate under the circumstances and in the best interest of HUD. In determining the rental rate, it is important to consider that FEMA will provide disaster victims with a rent check in an amount based on the fair market rent in the affected area for a predetermined number of months.

      The Management and Marketing Contractor may be used to assist the REO Director in determining an appropriate rental rate, but the REO Director must approve the rental rate and advise the disaster victim of the rental rate prior to occupancy.

New Loan and Servicing Options

  • Individuals in designated disaster areas have the option of obtaining a special 203(h) loan, Home Mortgage Insurance for Disaster Victims. This program allows for 100 percent financing on FHA-insured loans. Instructions can be found in HUD Handbook 4155.1 REV-5, paragraph 2-18, and ML 06-21.
  • HUD also offers the 203(k) program which may include funds to refinance the existing mortgage and funds for repairs in a single new mortgage. Information for the 203(k) program can be located in HUD Handbook 4240.4 REV-2 and various Mortgagee Letters.
  • Servicing procedures described in HUD Handbook 4330.1 REV-5, Chapter 14, place an automatic 90 day moratorium on foreclosures for properties directly affected by the disaster. The moratorium also applies to mortgagors whose financial viability is affected.

    NOTE: Mortgagee Letters are no longer issued to alert of disaster areas. Notification is the Presidential Declaration. Details are available through the FEMA website.

Content Archived: November 29, 2012