a. General Rule. Protective devices or mitigation measures in place before the disaster are eligible. If not in place before the disaster, eligibility is based on the need for adding such a device or measure. Examples of these devices or measures include, but are not limited to:
(1) Retaining walls;
(2) Fences;
(3) Seawalls or bulkheads;
(4) Relocating utilities; and (5) Modifying structures.
b. Pre-existing Protective Devices or Measures. If the devices or measures existed prior to the disaster, the full cost to repair or restore to predisaster condition is eligible, except when the devices or measures were installed outside of a home or other building. In those instances, only the cost of repairing or restoring the device to functional predisaster condition is eligible. (The costs of repairing or restoring any cosmetic or nonfunctional embellishments are subject to the landscaping limits.)
c. Code Requirements for Protective Devices or Mitigation Measures. If the devices or measures did not exist prior to the disaster, the full cost of a device or measure to meet code requirements is eligible.
d. Necessity of Protective Devices or Mitigation Measures to Make Disaster Repairs. If the devices or measures did not exist prior to the disaster, but are absolutely necessary to repair or restore the property, the full cost is eligible if:
(1) It is the only feasible or practical method of repairing or restoring disaster damage to land, land improvements, or structures; and
(2) It prevents immediate and continuing danger of serious damages to structures (not land and land improvements); and
(3) We receive written evidence from a professional third-party (such as an engineer's report) which clearly establishes the necessity for the device or measure (opinions from real estate agents, insurance adjusters and the like should not be considered);
and
(4) You document the necessity in the case file.
e. Post Disaster Mitigation Measures. The statute provides eligibility for the costs of these devices or measures subject to the following:
(1) Mitigation eligibility depends on there being verified RE or LHI damage. If there is only PP damage, there is no mitigation eligibility. Measures designed only to protect PP are not eligible. Eligibility is exclusive to the damaged property and does not transfer if the applicant relocates.
The loan amount must include funds for physical losses. We cannot approve a loan for post-disaster mitigation only.
(2) The maximum eligible cost is 20 percent of the verified physical loss (before any duplicated benefits are deducted), with a maximum of $200,000 for home loans only.
(a) This additional mitigation amount up to 20 percent is not subject to the
$200,000 administrative limit for real property damage for home loans.
The 20 percent is based on the full amount of the loss for both RE and PP.
Thus, the maximum possible amount of a disaster home loan is $640,000 ($200,000 for RE damage, $40,000 for PP damage, $200,000 for mitigation, and $200,000 for refinancing).
(b) For business loans, the 20 percent is subject to the $2,000,000 legislative limit.
(c) For refinancing purposes, you do not include the additional amount in calculating substantial damage or when determining the eligible refinancing amount.
(d) You may include code required upgrades which could also qualify as mitigation and which cannot be funded due to the administrative limit under mitigation eligibility.
(e) For mitigation amounts greater than $50,000, only the AA/DA or designee can approve these applications, based on the recommendation of the CD/PDC (or designee).
(3) The proposed device or measure must protect or mitigate against damage from the same type of occurrence as the declared disaster (e.g., protection against future flood damage when the disaster was a flood).
(4) The applicant must choose the protective device or mitigation measure. You must not recommend any specific mitigation measure or comment on the relative merits of one measure as compared to another. The Loss Verifier must evaluate each request for need or appropriateness before you can take action.
(5) During loan processing you must:
(a) Not include the additional mitigation amount in the credit elsewhere determination (because these costs are voluntary);
(b) Address in the case file how the applicant will fund the difference if the cost of the device or measure exceeds the allowable mitigation loan amount; and
(c) Include in the LAA a specific use of proceeds stipulation.
(6) Generally, applicants can request funds for mitigation at any time during the filing period, or if a loan is approved, through the time of full disbursement. After full disbursement, we will accept a request for additional funds for mitigation if we
determine that the delay resulted from substantial causes essentially beyond the control of the applicant.
(7) You must base the 20 percent limitation on the verified physical loss (the original verified physical loss, plus increases, and less decreases) at the time of the approval of an additional amount for mitigation. If the amount of the verified loss for physical damage is subsequently decreased, we do not decrease eligibility for mitigation funds we have already approved. But if the amount of the verified loss for physical damage is subsequently increased, mitigation eligibility is increased proportionally.
(8) Alternate use of loan eligibility is permissible to cover mitigation measures. The 20 percent limit applies only to the amount added to the loan amount for physical damage, and not to the alternate use. As with all requests for alternate uses of eligibility, approval is contingent upon our conclusion that sufficient repairs can be made to make the damaged property reasonably usable and safeguard the Agency's collateral. Generally, we accomplish this by disbursing that part of the proceeds to fund the necessary repairs prior to that part to fund the mitigation measure.
(9) In cases of a condominium or similar association where the damage is to the real property of individual unit owners and to the common property owned by the association, the individual condominium unit owners may assign their mitigation eligibility to the condominium association.
(10) Tenants who own leasehold improvements are eligible for mitigation. However, a lease requirement to repair the owner's real property does not convey mitigation eligibility to the tenant.
f. Pre-Disaster Mitigation Loan Program. See appendix 13 for an explanation of program guidelines and procedures.
64. RESERVED 65. RESERVED
CHAPTER 7
ELIGIBLE LOAN AMOUNT