President Signs Katrina Bailout ForHomeowners And Lenders
WASHINGTON - (06/19/06) President Bush signed anemergency spending bill Friday that will provide $4.2 billion tobail out Louisiana homeowners uninsured for flooding caused byhurricanes Katrina and Rita last year. The money will be used togrant up to $150,000 for each homeowner who did not have floodinsurance and whose home was damaged or destroyed during one of thetwo massive storms. A similar, but much smaller, bailout is in theworks for Mississippi homeowners where as much as $1.5 billion isexpected to be granted. Louisianas The Road HomeProgram' will be as much of a bailout for credit unions, banks andother mortgage lenders, which hold the mortgages on all of thedamaged properties. Under the program, the funds, minus insurancesettlements and other grants, will go to homeowners whose primaryresidences were destroyed or severally damaged, or to those whowere forced to relocate out of state. The borrower can sell theirhome to the state for 60% of its pre-storm value, minus insuranceproceeds and other federal disaster repair funds. If the borrowerdecides to sell, the lender may be asked to write-off a portion ofthe debt. To participate in the program, homeowners must have atleast $5,300 of uninsured damages from hurricanes Katrina orRita.