Relief For Uninsured Homeowners On Its Way
Relief for tens of thousands of New Orleans-area homeowners who were uninsured for flood damage last year is on its way.
Department of Housing and Urban Development Secretary Alphonso Jackson traveled to the French Quarter last week to announced HUD's approval of a bailout plan that would allow the state of Louisiana to use Community Development Block Grant funds to provide up to $150,000 to uninsured homeowners to repair homes badly damaged or destroyed by hurricanes Katrina and Rita.
The program will be as much of a bailout for credit unions, banks and other mortgage lenders, which hold the mortgages on all of the damaged properties.
But Congress has only appropriated $4.2 billion of the estimated $8.8 billion required to fund the program, called "The Road Home," meaning lawmakers will be asked as part of an emergency funding bill to provide the remaining $4.6 billion needed.
The additional funding is supported by President Bush and his Hurricane Katrina Relief Czar Donald Powell, the former head of the FDIC. Under the program, the funds, minus insurance settlements and other grants, will go to homeowners whose primary residences were destroyed or severely damaged, or were forced to relocate out of state.
The borrower can sell the home to the state for 60% of its pre-storm value, minus insurance proceeds and other federal disaster repair funds. If the borrower decides to sell, the lender may be asked to write-off a portion of the debt.
To participate in the program, homeowners must have at least $5,300 of uninsured damages from hurricanes Katrina or Rita.
The role of lenders on the program, including disbursement of the funds, is still being worked out.
A similar hurricane bailout of homeowners not covered by flood insurance is being conducted in Mississippi.
Congress has already approved $23 billion in funding for the National Flood Insurance Program and is still as much as $21 billion short. But tens of thousands of homes in the path of the two massive hurricanes were not covered by the national program, administered by the Federal Emergency Management Agency.
More than 200,000 homes in Louisiana were damaged by the two massive storms, 123,000 of them severely.
Another 82,000 rental properties also suffered major damages.
Louisiana officials hope to begin sending out relief checks by late summer.
Homeowners may register for The Road Home program by calling toll-free 1-888-ROAD-2LA or by going to the state's website at LousianaRebuilds.info.
Ed Roberts can be reached at robertscuj