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In Case of Emergency: Planning for Disaster

One of the most stressful factors in conducting business is preparing for the unknown. According to statista.com, in 2018, there were 394 natural disasters worldwide. With the uncertainty of not knowing when a natural disaster is going to occur, it is crucial to have a business plan in place to ensure that your company is well-equipped.  

Preparing for the Storm

Protecting the interests of your clients, safeguarding employees’ lives and the firm’s property, and quickly recovering and resuming operations should be at the forefront of considerations when disaster strikes. When putting your disaster plan in place, some important items to consider are power and internet outages, data backup and recovery, the safety of your IT equipment, financial and operational assessments, staffing, communications with employees and clients, and communication with critical suppliers and vendors.

When it comes to power and internet outages, a generator is a quick and easy way to get back up and running. If you are leasing a space, it is advisable to obtain written approval ahead of time to allow for the installation of a generator on a temporary or permanent basis. Also, ensure that you have reliable battery backups until the generator is installed.

It is also recommended to have a call tree in place for when a storm is approaching, and verifying that all staff member’s phone numbers are updated on a regular basis. Setting up a staff hotline can also provide the means to communicate regarding office closures and other important information related to the disaster.

Periodic testing and documentation of the results of your disaster recovery plan are essential to ensuring you have the proper controls in place should a disaster strike. This includes backing up your data throughout the year to ensure no loss of data, ensuring you have a plan in place for where your data center can be relocated in case of a natural disaster, and identifying an employee who would be willing and able to travel to the relocation site.

Declaring an Emergency

Now that we’ve established some basic recommendations on how best to prepare for a natural disaster, we also wanted to discuss how an area becomes a Presidentially Declared Disaster Area, as well as the different types of declarations that can be made.

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act) states, in part, “... all requests for a declaration by the President that a major disaster exists shall be made by the Governor of the affected State.”

Such requests by the Governor of a state, or the Acting Governor in their absence, are made to the President through the appropriate regional administrator within 30 days of the incident’s occurrence. According to the Act, that period may be extended provided that a written request is made. Once the requests have been made, reviewed, and approved, the President can declare an emergency or major disaster (if applicable).

An Emergency Declaration is made when the President determines that federal assistance is needed. Emergency Declarations supplement state and local or Indian tribal government efforts in providing emergency services, such as the protection of lives, property, public health, and safety, or to lessen or avert the threat of a catastrophe in any part of the United States.

In contrast, a Major Disaster Declaration is used for a disaster or natural event—including any hurricane, tornado, storm, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought, or, regardless of cause, fire, flood, or explosion—that the President determines has caused damage of such severity that it is beyond the combined capabilities of state and local governments to respond.

Types of Assistance

No matter which type of declaration is made, two different forms of assistance can be determined—individual assistance and/or public assistance. Both can also be used simultaneously. Individual assistance means assistance to individuals and households, which may include counseling programs, disaster case management, disaster unemployment assistance, or disaster legal services. Public assistance focuses more on assistance to state, tribal, and local governments, and certain private nonprofit organizations for emergency work and the repair or replacement of disaster-damaged facilities.

The distinction between individual and public assistance is important, as occasionally servicers may issue moratoriums on loans, depending on which assistance has been determined. For homeowners, it is important to speak with their servicers after a natural disaster in order to determine if a moratorium will be issued. Typically, the moratoriums last 90 days, but they may occasionally be extended for longer periods of time.

These moratoriums are extremely important to track, especially when it comes to Federal Housing Administration (FHA) deadlines, and tracking the new FHA deadlines upon expiration of the moratoria. It is vital to monitor each new deadline to ensure no deadlines are missed. Information regarding which counties have been declared a major disaster can be found on FEMA’s website, which should be checked multiple times daily in the aftermath of a disaster event.

Once the storm has passed and any declarations have been made, it is important for the firm to assess the damage and resume operations. This includes ensuring that all staff is safe, that the firm’s office is secure and free from damage, and that power and internet are restored. If not, service requests must be escalated to the proper authorities and it must be confirmed that it is safe for employees to travel to the office.

Resuming Operations

During the resumption of operations, it is key to have a clear line of communication with the case-management system administrator to identify, track, and manage affected properties within the firm’s caseload. Having back-end access to the firm’s case-management system allows for the development of customizable internal and client-reporting needs. Creating customizable reporting that factors in affected counties, declared disaster areas, clients, and investors allows for seamless communication and follow-up with clients.

Another effective way to track and manage the workload is by creating custom event sequences within your internal case-management system. Inspection and condition of the property prior to conveyance to an investor is key, which requires diligent followup and communication with the client(s) as to the affected properties. Investment in sophisticated integration software between the firm’s case-management system and the client’s system could be vital in allowing your office to receive real-time updates from the clients as to the directive under which they wish to proceed with the affected property.

At the end of the day, no one can plan 100% for every situation, but we can certainly try to be as prepared as possible.  

About Author: Marissa M. Yaker

Marissa M. Yaker is the Managing Attorney of Regulatory Affairs for Padgett Law Group. Yaker’s practice is primarily focused on creditors’ rights and foreclosure, an area of law that she has practiced for eight years. She is former Interim-Chair of Legal League’s Special Initiatives Working Group; Vice-Chair of the Florida Bar Grievance Committee; Member of the Governmental and Public Policy Advocacy Committee of the Florida Bar; Member of the American Legal & Financial Network’s Women in Legal Leadership and Junior Professionals & Executives Group. Yaker was recognized by DS News as one of the Top 25 Women in Law, 2020 Rising Business Leader, and 2020 ALFN JPEG Award Winner.

About Author: Michelle Devore

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Michelle Devore is the Systems and Process Manager for Padgett Law Group (PLG). Devore has been with PLG for more than seven years, managing foreclosure, operations, client systems, and compliance. Devore has more than 11 years’ experience in the default services industry, working on both the law firm and servicers side.

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