FHA Mortgage Assistance
The FHA is going to provide mortgage payment assistance for up to 20,000 homeowners affected by hurricanes Katrina, Rita, and Wilma. This assistance will be available to homeowners in specific regions affected by the storm who have FHA-insured mortgages. The plan to pay mortgages (coverage would include principal, interest, taxes and insurance) for up to a year takes the form of a zero-interest subordinate mortgage that would be paid at the end of the existing FHA-insured mortgage.
While the program’s usefulness in New Orleans seems limited by the terms of the deal (participants have to commit to stay in these homes and either live in them now or have the money from insurance payments or elsewhere to repair or rebuild the homes within 12 months according to the WaPo article cited above) it will probably provide a tipping point for some that may still be fence-sitting to commit to return and rebuild. One problem that springs to mind is the existing uncertainty about the fate of whole sections of the city as debates over whether people will be allowed to rebuild in some areas continue.
Given the vastness of the destruction caused in New Orleans by the levee failure, you have to question just how many people will be able to rebuild within 12 months, even if that clock doesn’t start ticking until the application for assistance is approved. What happens if the 12 month deadline isn’t met? My guess would be nothing, if the homes in question are at least livable at that point. The HUD info page doesn’t actually specify a 12-month rebuild period, they simply specify that houses “damaged by the hurricanes but can be rebuilt given adequate time.” Additionally, people whose homes were not damaged but who have lost their primary source of income can also qualify for this assistance, if they can demonstrate need and that they are likely to be reemployed within a reasonable amount of time.
For people who qualify, this program is probably a no-brainer. If anyone knows of programs to help people who must resume their mortgage payments this month (apparently some will be required to make back payments, as well) as the three month moratorium granted by many private lenders expires, feel free to post links to them in the comments.
Information about this and several other programs can be found at the HUD website.