Hurricane Wilma
Hurricane Wilma did not cause the level of devastation and damages seen by Hurricanes Katrina and Rita.  The servicers on the call have been addressing borrower concerns with standard Natural Disaster processes in place.  Fannie Mae, Freddie Mac, VA, and HUD encouraged forbearance and do not expect to release special servicing or P&P guidelines for these properties.
 
Demolition Notices
The parishes of St. Bernard and Plaquemines announced aggressive plans to demolish properties in effort to speed the rebuilding process.  They have enlisted the assistance of the Army Corps of Engineers, who will be inspecting the properties and tagging them to be demolished if unstructurally sound, damaged beyond repair, or uninhabitable.  Homes are not to be demolished without the borrower's consent, and the cost of demolition will be covered by FEMA.  For additional details regarding the demolition process please click the following link:  Commonly asked questions about St. Bernard Parish’s demolition process.
There is also concern regarding insurance claim denials if the property is demolished prior to the insurance carrier's initial inspection.  These situations will be reviewed on a case by case basis.  However, the insurance carriers are already in these areas inspecting properties and do not expect many of these situations.  Louisiana law forces insurance carriers to approve claims if properties are demolished per city or parish ordinance.  

Hazard Insurance Claims
Personal lines carriers and forced placed carriers are to issue checks co-payable to the borrower and servicer.  However, FEMA benefits will only be issued to the borrower.  HUD advised in their HUD ML 2005-41 that they are "working with FEMA to ensure that checks issued by FEMA for flood insurance claims are payable jointly to the borrower and the mortgagee."
 
The flood insurance policy has an increased cost of compliance amount available to raise the property above sea level or to demolish the property.  The additional benefit is up to $30,000.
 
There are pending class action law suits that have been filed against some of the personal lines carriers in the affected states.  Servicers would like to know if claims will not be paid until the lawsuits are settled.
 
The Louisiana Department of Insurance is awaiting a final declaratory judgment from the courts on whether the levy breaks were a result of wind driven rain damage, or flood damage.  More direction can be given once the judgment has been made.  At this time there is no resolution.
 
Securing Properties
Servicers have begun to secure delinquent loans found vacant and several are assessing the fee to the borrowers.  In addition, a contact card is being left at the property with details as to why the property was secured and who to contact at the bank.
 
HUD ML 2005-41
HUD released the first of 3 mortgagee letters addressing Hurricane Katrina and Rita related issues.  This mortgagee letter specifically addresses inspections, property preservation, and hazard claims allowables and guidance.  The next two are expected to cover a new loss mitigation tool and extension of time frames.
 
HUD clarified the following pertaining to ML 2005-41:
1) The 25/35 day rule has been suspended temporarily.  Properties (across the entire country) outside of the FEMA declared individual assistance areas are to be inspected within 40 days of the last completed inspection. 

2) Up to 2 inspections per month will be reimbursed in the individual assistance areas if the servicer feels necessary.  It is not required to perform 2 inspections per month.

3)  The $750 allowable for emergency repairs is only available for tarping or repairing roofs.

4) M&M contractors are to be notified of properties marked for demolition, however, the servicer will not be held liable if the information was not provided to them in advance.
 
Email communication to the M&M contractors reporting the results of the initial inspection and property condition is sufficient notice.
 
HUD is reviewing the reimbursement of properties without insurance coverage or insufficient insurance settlements.
 
Fannie Mae Update
Fannie Mae has issued instruction in Fannie Mae Lender Letter 02-05 requiring initial inspections to be completed.  At this time Fannie Mae does not plan to reimburse for any additional inspections.   If servicers completed inspections prior to October 15th Fannie Mae will reimburse if the necessary information is provided with photos.  The required questions do not need to be answered if the property was found occupied.
 
Fannie Mae is in the process of issuing general property preservation guidelines for the disaster areas.   If servicers have additional questions they are to email them to hurricane_assistance@fanniemae.com.

Department of VA Update
VA does not plan to issue any additional guidance for borrowers affected by Hurricane Wilma.  Servicers are directed to reference the standard VA disaster relief policies.  In addition, VA does not plan to enforce or reimburse for additional inspections in the disaster affected areas.
 
Freddie Mac Update
Freddie Mac does not plan to issue any additional guidance for borrowers affected by Hurricane Wilma.  Servicers are directed to reference the standard Freddie Mac disaster relief policies.
 
The call was recorded and is available for replay by clicking here: Conference Call Audio