By Pam Martens and Russ Martens: August 29, 2017

According to insurance experts, approximately 80 percent of the homeowners impacted by flooding in Houston may not have flood insurance policies on their home. That’s because much of Houston falls outside of designated Special Flood Hazard Zones where mortgage holders are required to maintain flood insurance policies.

Hoping to relieve some of the panic by homeowners rescued from water-logged homes in Texas who have no idea when they may be able to return to their home or where the money will come from to restore the home to livability, the Federal Emergency Management Agency (FEMA) has released a fact sheet on what types of disaster assistance it can make directly to individuals along with specifics on how to apply.

The fact sheet makes clear that not all individuals are being guaranteed each form of assistance. It notes that the assistance “can include as required” the following.

• Rental payments for temporary housing for those whose homes are unlivable.  Initial assistance may be provided for up to three months for homeowners and at least one month for renters.  Assistance may be extended if requested after the initial period based on a review of individual applicant requirements.
• Grants for home repairs and replacement of essential household items not covered by insurance to make damaged dwellings safe, sanitary and functional.
• Grants to replace personal property and help meet medical, dental, funeral, transportation and other serious disaster-related needs not covered by insurance or other federal, state and charitable aid programs. (FEMA funded at 75 percent of total eligible costs; 25 percent funded by the state.)
• Low-interest loans to cover residential losses not fully compensated by insurance.  Loans available up to $200,000 for primary residence; $40,000 for personal property, including renter losses.  Loans available up to $2 million for business property losses not fully compensated by insurance.
• Loans up to $2 million for small businesses, small agricultural cooperatives and most private, non-profit organizations of all sizes that have suffered disaster-related cash flow problems and need funds for working capital to recover from the disaster’s adverse economic impact.  This loan in combination with a property loss loan cannot exceed a total of $2 million.
• Loans up to $500,000 for farmers, ranchers and aquaculture operators to cover production and property losses, excluding primary residence.
• Other relief programs: Crisis counseling for those traumatized by the disaster; income tax assistance for filing casualty losses; advisory assistance for legal, veterans’ benefits and social security matters.

To apply for assistance, individuals and business owners in the designated counties can register online at www.DisasterAssistance.gov or call 1-800-621-FEMA (3362).  Disaster assistance applicants, who have a speech disability or hearing loss and use TTY, should call 1-800-462-7585 directly; for those who use 711 or Video Relay Service (VRS), call 1-800-621-3362.  FEMA indicates that the toll-free telephone numbers are currently operating from 7 a.m. to 10 p.m. (Texas time) seven days a week.

The Small Business Administration (SBA), another Federal program, has also posted specifics on the financial relief it can bring to small businesses that have been impacted by Hurricane Harvey. It lists the following forms of relief that could be available:

• Business Loans – The law limits business loans to $2,000,000 for the repair or replacement of real estate, inventories, machinery, equipment and all other physical losses.  Subject to this maximum, loan amounts cannot exceed the verified uninsured disaster loss.
• Economic Injury Disaster Loans (EIDL) – The law limits EIDLs to $2,000,000 for alleviating economic injury caused by the disaster.  The actual amount of each loan is limited to the economic injury determined by SBA, less business interruption insurance and other recoveries up to the administrative lending limit.  EIDL assistance is available only to entities and their owners who cannot provide for their own recovery from non-government sources, as determined by the U.S. Small Business Administration.
• Business Loan Ceiling – The $2,000,000 statutory limit for business loans applies to the combination of physical, economic injury, mitigation and refinancing, and applies to all disaster loans to a business and its affiliates for each disaster.  If a business is a major source of employment, SBA has the authority to waive the $2,000,000 statutory limit.
• Home Loans – SBA regulations limit home loans to $200,000 for the repair or replacement of real estate and $40,000 to repair or replace personal property.  Subject to these maximums, loan amounts cannot exceed the verified uninsured disaster loss.

The following restrictions are placed on loan eligibility for this program by the SBA:

• Uninsured Losses – Only uninsured or otherwise uncompensated disaster losses are eligible.  Any insurance proceeds which are required to be applied against outstanding mortgages are not available to fund disaster repairs and do not reduce loan eligibility.  However, any insurance proceeds voluntarily applied to any outstanding mortgages do reduce loan eligibility.
• Ineligible Property – Secondary homes, personal pleasure boats, airplanes, recreational vehicles and similar property are not eligible, unless used for business purposes.  Property such as antiques and collections are eligible only to the extent of their functional value.  Amounts for landscaping, swimming pools, etc., are limited.
• Noncompliance – Applicants who have not complied with the terms of previous SBA loans may not be eligible.  This includes borrowers who did not maintain flood and/or hazard insurance on previous SBA loans.

The SBA notes that loan applicants should check with other agencies/organizations administering any grant or other assistance program under the Hurricane Harvey disaster declaration to determine how an approval of an SBA disaster loan might affect their eligibility for the other programs.

SBA can also make additional funds available for mitigation. Its web site notes the following:

“If your loan application is approved, you may be eligible for additional funds to cover the cost of improvements that will protect your property against future damage.  Examples of improvements include retaining walls, seawalls, sump pumps, etc.  Mitigation loan money would be in addition to the amount of the approved loan, but may not exceed 20 percent of total amount of physical damage to real property, including leasehold improvements, and personal property as verified by SBA to a maximum of $200,000 for home loans.  It is not necessary for the description of improvements and cost estimates to be submitted with the application.  SBA approval of the mitigating measures will be required before any loan increase.”

If you are a victim of Hurricane Harvey and stuck in a high interest mortgage, SBA may also be able to help you reduce your mortgage costs. SBA writes:

“SBA can refinance all or part of prior mortgages that are evidenced by a recorded lien, when the applicant (1) does not have credit available elsewhere, (2) has suffered substantial uncompensated disaster damage (40 percent or more of the value of the property or 50% or more of the value of the structure), and (3) intends to repair the damage. Business owners may be eligible for the refinancing of existing mortgages or liens on real estate, machinery and equipment, up to the amount of the loan for the repair or replacement of real estate, machinery, and equipment.  Homeowners may be eligible for the refinancing of existing liens or mortgages on homes, up to the amount of the loan for real estate repair or replacement.

To contact the SBA’s Disaster Assistance Customer Service Center, you can call (800) 659-2955;  email disastercustomerservice@sba.gov. Deaf and hard-of-hearing individuals may call (800) 877-8339.  Applicants may also apply online using the  Electronic Loan Application (ELA) via SBA’s secure web site at https://disasterloan.sba.gov/ela.

There is also a Federal program that provides funds to the impacted state so that individuals whose employment or self-employment has been lost or interrupted as a direct result of a major disaster and who are not eligible for regular unemployment insurance benefits can receive payments. To file a claim, individuals in Texas who are unemployed as a  result of Hurricane Harvey should contact the state’s unemployment insurance agency to determine if the assistance is being made available.