[StBernard] Some hurricane victims to receive mortgage relief

[Westley Annis]

Some hurricane victims to receive mortgage relief

WASHINGTON (AP) -- The Federal Housing Administration is launching a program
to pay the mortgages of up to 20,000 victims of hurricanes Katrina, Rita and
Wilma for as much as a year.

The unprecedented mortgage relief will be offered to people who own homes
with FHA-insured mortgages in designated hurricane-ravaged parts of Alabama,
Florida, Louisiana, Mississippi and Texas.

"These families have been devastated, Not only are they living far from home
right now, but many have lost their source of income," Housing and Urban
Development Secretary Alphonso Jackson said.

"We want to help end that hopeless feeling for them, by letting them come
back home and concentrate on putting their lives in order without having to
worry about making mortgage payments," Jackson said.

The program is the latest of several steps by the department and its housing
administration to address the mortgage woes of hurricane victims. On
November 23 Jackson extended until February 28 a moratorium on foreclosures
against FHA-insured families damaged by Katrina or Rita. A freeze on
foreclosures on FHA-insured Wilma victims lasts until January 22.

In contrast to the plan for federally insured mortgages, much of the private
mortgage industry in September voluntarily granted a three-month freeze on
foreclosures on mortgages without federal insurance. But that grace period
is ending. Many of these mortgage-holders are being asked to resume payments
-- even back ones -- this month.

The FHA's plan could cost as much as $200 million, if all the estimated
20,000 eligible homeowners apply, federal officials say. But none of that
total would be taxpayer funds. The money would come from FHA insurance
reserves funded by premiums paid by borrowers who have FHA-insured
mortgages, the officials say.

Ultimately, the homeowners would have to repay the FHA, but under very
generous terms. The federal mortgage payments would be interest-free loans
not due until the homeowner's original FHA-insured mortgage was paid off.

To obtain the mortgage assistance, the homeowners would have to sign a
subordinate, interest-free mortgage payable to the FHA for the amount of
assistance, which would cover principal, interest, taxes and insurance for
up to 12 months.

Participants would have to be committed to staying in these homes and either
able to live in them now or have the money from insurance payments or
elsewhere to repair or rebuild the homes within 12 months. In this way,
Jackson said, the program "is also an investment in the long-term stability
of their neighborhoods."

Kurt Pfotenhauer, senior vice president of the Mortgage Bankers Association,
said the amount of financial aid offered "will help many borrowers get their
lives back on track and allow them to focus on the formidable task of
rebuilding."

Eligibility requirements
To be eligible, borrowers must:


have an FHA-insured first mortgage on their primary residence.

live or be employed full time in those counties or parishes of the five
states declared eligible for individual assistance as a result of one of the
three hurricanes.

be able to show they are temporarily unable to pay their monthly mortgage as
a result of increased living expenses, hurricane damage to their property or
loss of income like temporary unemployment.

expect to be able to resume full mortgage payments within 12 months.

have missed at least four but not more than 12 payments on their FHA-insured
mortgage.
The money cannot be used for repairs, but HUD has other programs that
provide loans for disaster-related repairs.

Interested homeowners should contact their lenders, who will determine if
they meet eligibility requirements, or call HUD's national servicing center
at 1-888-297-8685

Copyright 2005 The Associated Press. All rights reserved.This material may
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