Mortgage industry gears up to help victims of Hurricane KatrinaMortgagePress.commortgage industry, donations, waiving fees
NAMB urges debt relief for victims
With the scope of the devastation wrought by Hurricane Katrina
coming into greater focus, the National Association of Mortgage
Brokers board of directors held a special meeting on Aug. 30,
where they voted unanimously to urge banks and other lenders
operating in the Gulf Coast area to make special provisions for
Hurricane Katrina's victims in Mississippi, Louisiana and
Alabama.
The four provisions that the board wants to see implemented
immediately are:
- A moratorium on payments for the next 90-120 days
- No foreclosures for the next 90 days
- A moratorium on reporting late payments to credit reporting
agencies
- No late payments charged or accrued for the next 90-120 days
Additionally, NAMB is urging its members to contribute to the
NAMB Hurricane Relief Fund in addition to giving to general relief
groups. Donations to the fund will go directly to supporting NAMB
members whose homes have been seriously damaged or destroyed by
Hurricane Katrina.
For more information, visit www.namb.org. MBA asks
members to inform customers of relief options
In response to the devastating affect of Hurricane Katrina, the Mortgage Bankers Association of
America is urging its member mortgage companies to offer
mortgage relief to borrowers who have lost their homes, suffered
damage to their properties or incurred a loss of employment due to
damage to their workplaces. The association is encouraging members
to reach out to potentially affected customers to inform them of
the relief options available to them. The following disaster relief
options from Fannie Mae, Freddie Mac, FHA, Ginnie Mae and VA may be available for affected
borrowers:
- Temporary suspension or reduction of mortgage payments;
or
- In certain cases, modification of the terms of existing
mortgages.
For more information, visit www.mortgagebankers.org.
Freddie Mac donates $10 million to support relief
efforts; also offering housing expertise and mortgage
relief
Freddie Mac and the Freddie Mac Foundation are donating $10
million to aid organizations providing relief efforts to support
the victims of Hurricane Katrina. This is in addition to a $100,000
donation that the company made to the American Red Cross earlier.
Freddie Mac has also asked its mortgage servicers to extend payment
relief to qualified borrowers in the areas affected by the storms,
whose homes have been damaged or destroyed.
"The devastation caused by Hurricane Katrina is a tragedy of
tremendous proportion for our nation. As a company dedicated to
helping house our nation's families, we are incredibly saddened by
the extent of suffering and loss," said Freddie Mac Chairman and
CEO Richard F. Syron. "For those families that still have homes, we
want to help them keep their homes. And for those families who are
displaced, we hope our contributions of money and resources will
help ease their burden as they get back on their feet."
Freddie Mac's employees are also committed to helping, and the
Freddie Mac Foundation is matching their contributions, as well as
doubling the match for their donations to non-profits providing
shelter and housing for hurricane victims.
For more information, visit www.freddiemac.com. A la mode inc. donates $400,000
to relief effort
Knowing that the damage caused by Hurricane Katrina will take
quite some time to repair and that it will be a long while before
life in the affected areas returns to normal, a la mode Inc. is
deferring all fees and payments of any kind for its thousands of
clients in Louisiana, Mississippi and Alabama for as long as
necessary. The company also announced that it has matched the Aug.
30
Realtors Relief Foundation donation of $150,000 in cash, split
equally between the disaster recovery operations of the state
Realtor associations in the three states. In addition, a la mode's
founder and chairman, Dave Biggers, indicated that he will ask all
of the company's clients to donate to the American Red Cross
through the a la mode Web site, www.alamode.com/katrina,
and will personally match the total contribution up to
$250,000.
"These are our clients, our neighbors and our friends, and we
intend to do all we can to help. I truly hope our users donate as
much as possible, so I can give the entire $250,000," said Biggers.
"And if the response is overwhelming, I'll be happy to go farther.
Living in Oklahoma City through bombings as well as devastating
tornados, I know what sort of hospitality the nation and this
industry extends during a disaster.
For more information, visit www.alamode.com. Fannie
Mae amends natural disaster relief procedures
Fannie Mae has amended its disaster relief procedures, primarily
for disbursing insurance claim proceeds. Fannie Mae has streamlined
its procedures for handling insurance proceeds to provide servicers
with more discretion in managing their process for the disposition
of hazard (and, if applicable, flood or earthquake) insurance
proceeds. These streamlined procedures are based primarily upon the
status of the mortgage at the time of the disaster and the extent
of the damage. The procedures have four categories that:
1. Provide servicers with more discretion to disburse funds when
properties securing current mortgages have not suffered a total or
near-total loss (servicers, therefore, may choose to disburse all
proceeds for the repairs and restoration in a single payment,
regardless of the amount, or in a series of progress payments as
work is completed);
2. Increase the maximum amounts that servicers can disburse when
properties securing delinquent mortgages have not suffered a total
or near-total loss;
3. Provide an electronic process for mortgages 90 days or more
delinquent and for mortgages in foreclosure; and
4. Address options for the disposition of insurance proceeds for
mortgages that are current or 30-90 days delinquent, based upon
borrowers' willingness to repair their properties.
Additionally, Fannie Mae will require servicers to temporarily
discontinue reporting delinquencies to credit bureaus if they are
aware that the borrower's delinquency is due to hardships as a
result of a natural disaster. Also, servicers may now use the
reports provided by property inspectors to document the property
inspections. These requirements also pertain to mortgages in
bankruptcy.
For more information, visit www.fanniemae.com.
HUD announces Hurricane
Katrina disaster assistance
U.S. Department of Housing and Urban Development Secretary
Alphonso Jackson has announced that he is instructing all
FHA-approved lenders to provide foreclosure relief to FHA-insured
families who are affected by Hurricane Katrina. The relief includes
a special 90-day moratorium on all foreclosures of FHA-insured
properties in the federally declared disaster areas. Jackson is
also encouraging lenders to undertake actions such as mortgage
modification, refinancing and waiver of late charges.
"We understand the pain that these families are going through in
the wake of Hurricane Katrina," Jackson said. "We are committed to
giving those families the security of having a roof over their
heads as soon as possible even if it's a temporary solution."
Following President Bush's federal disaster declaration, HUD
began providing staff to disaster field offices set up by the Federal Emergency Management Agency.
HUD's initial concern is to help meet the immediate housing needs
of those whose homes have been damaged or destroyed. HUD is also
reaching out to its private sector partners for assistance. HUD is
contacting top mortgage lenders about their inventory of
repossessed homes, the homebuilding industry for help with building
materials and supplying construction workers, its housing
counseling network to assist displaced homeowners and the
manufactured housing industry about available housing stock.
HUD has also established a toll-free telephone number to answer
all housing-related questions for Hurricane Katrina victims,
including those regarding temporary housing, which replaces all
previously issued, departmentalized toll-free numbers. That number
is (888) 297-8685, and is staffed from 7:00 a.m. to 8:00 p.m. CDT,
seven days a week.
HUD will:
- Provide temporary housing and shelter HUD will identify vacant
multi-family housing, public housing units and HUD-owned homes that
could be used as temporary housing for those forced from their
homes;
- Grant immediate foreclosure relief HUD will grant a 90-day
moratorium on foreclosures and forbearance on foreclosures of
FHA-insured homes;
- Reprogram and accelerate federal block grants Community
Development Block Grant and HOME grantees may reprogram previously
awarded grants to redirect their focus to disaster recovery
activities, but grantees must request the reprogram from HUD;
- Provide relief for Indian housing HUD will provide Indian
Community Development Block Grant funding (up to $300,000 per
grantee) for disaster relief for Indian housing and tribal
areas;
- Provide public housing reserve for disasters and emergencies HUD
has funding available for public housing authorities to help
rehabilitate damaged properties;
- Make available programs for damaged or destroyed properties HUD's
Section 203(k) loan program enables homebuyers and homeowners who
have lost their homes to finance both the purchase and/or
refinancing of a house and the cost of its rehabilitation through a
single mortgage. It also allows homeowners who have damaged houses
to finance the rehabilitation of their existing single-family home.
This program encourages lenders to make mortgages available to
borrowers who would not otherwise qualify for conventional loans on
affordable terms and to residents of disadvantaged
neighborhoods;
- Mortgage insurance for disaster victims HUD has a special
mortgage insurance program under Section 203(h) of the National
Housing Act to assist disaster victims. Under this program,
individuals or families whose residences were destroyed or damaged
to such an extent that reconstruction or replacement is necessary,
are eligible for 100 percent financing; and
++Offer assistance to Ginnie Mae issuers in disaster areas Ginnie
Mae will provide assistance to mortgage-backed securities (MBS)
issuers with significant concentrations of loans within the
affected areas. The assistance includes help in making payments to
MBS investors where homeowners are unable to make payment, and
eliminating delinquent loans from delinquency statistics used in
risk monitoring.
For more information, visit www.hud.gov.
U.S. Bank establishes Hurricane Katrina relief
fund
U.S. Bank has established a
Hurricane Katrina relief fund, which it will forward 100 percent of
donations to the American Red Cross. Anyone may contribute by
visiting any U.S. Bank office or branch, or existing customers may
contribute by calling (800) US-BANKS.
Additionally, U.S. Bank is also developing programs to assist
affected retail, small business and commercial banking customers in
the region. U.S. Bank representatives have committed to work with
impacted customers on an individual basis to aid them in their time
of need.
For more information, visit www.usbank.com.
Homebuilders release study on impact of
Katrina
Economists for the National
Association of Home Builders have released a report on how the
destruction spawned by Hurricane Katrina could affect the price and
supply of materials. The full extent of the impact of Hurricane
Katrina on the overall economy and on the housing market is still
unclear, and the immediate focus is properly on human life and
health, but the number of homes destroyed by this catastrophe is
almost certain to dwarf the losses from any previous U.S. natural
disaster. Past experience, together with the visible devastation,
provides some basis for projecting the effects on construction
activity, the supply and cost of building materials and
construction labor, and other implications for the housing
market.
The number of housing units destroyed (made uninhabitable and
beyond economically-justified repair) by Hurricane Andrew in 1992
was estimated at more than 28,000. The combined effect of
hurricanes Jeanne, Ivan, Frances and Charley in 2004 was almost as
large, with nearly 27,500 housing units destroyed, according to
estimates compiled by the American Red Cross. In those cases, most
of the destruction was caused by winds or the immediate force of
the storm surge. The number of homes with major, but reparable
damage was more than twice the number destroyed. The 1906 San
Francisco earthquake/fire reportedly destroyed 28,000
buildings.
Katrina also caused widespread immediate damage in Louisiana,
Mississippi and Alabama, but the flooding in New Orleans, Mobile,
Ala. and elsewhere is likely to translate into much larger numbers
of homes destroyed. Although the floods generally did not tear off
roofs, walls or cause structures to collapse, many homes will be
permanently uninhabitable. The floodwaters carried contaminants
that cannot easily be removed, and even if the water were clean,
prolonged submersion would cause structures to be damaged beyond
repair. This is likely to be the fate of a large share of the more
than 200,000 homes in the city of New Orleans.
Out of necessity, rebuilding will have to wait. The immediate
need will be to clean up and repair damage to structures that are
still viable. The repair process will absorb much of the
construction labor near the affected area and several key materials
that would otherwise have been used to build new homes. The
materials that will be most affected include roofing and wood
panels (plywood and OSB). Demand for other materials, such as
concrete, is likely to decline initially, as planned projects are
cancelled or delayed during the initial recovery period.
The storm will have impacts on the supply of materials, as well
as demand. The areas affected by the storm have a significant
number of wood product facilities that may have been damaged or
destroyed. On the other hand, trees that have been blown down will
need to be harvested on an accelerated basis, perhaps helping to
lower wood product prices in the medium term.
Additionally, imports of building materials will be disrupted by
the damage to port facilities. New Orleans was the top destination
for imports of cement and a number of other building materials into
the U.S. in 2004. Cement imports, in particular, involve the use of
specialized terminal facilities. The New Orleans and Mobile customs
districts reported about 12 percent of national cement imports in
2004. Congestion, caused by diversion of shipping to other ports,
will also probably disrupt some supplies of materials, as will land
transportation problems caused by damage to roads, rail and reload
centers.
From July 1992 to September 1992, largely as a consequence of
Hurricane Andrew, the average price for plywood increased from
about $222 per 1,000 square feet to $321, and the price of Southern
pine framing lumber rose from $264 per 1,000 board feet to $308.
The hurricanes in 2004 did not trigger a similar increase, and
prices actually fell during the relevant period, after soaring
during the preceding year. The combination of greater (partly
speculative) demand and disrupted supply produced a spike in lumber
and panel prices in the final days of August 2005. With production
already running at full capacity for wood panels, further increases
for those products, as well as for roofing, are likely.
Although the loss of tens of thousands of homes implies
increased demand for and construction of new homes, past experience
has shown that there is no massive surge in home building in
affected areas. Replacing units destroyed by the storm will not
begin for many months and will take place slowly, over a number of
years.
In Dade County (now called Miami-Dade), the number of
residential permits was 9,026, or 7.8 percent of the state total,
in 1993, the year following Hurricane Andrew. That share of the
state was slightly lower than the county's 7.9 percent share in
1991. By 1995, there was an increase to 14,718, or 12 percent of
the state total, but that number still wasn't much greater than
what might have been expected if there hadn't been a hurricane. The
experiences in other areas, such as Alameda County, Calif.,
following the 1991 fires, and Charleston, S.C., after Hurricane
Hugo in 1989, were similar. Homes were rebuilt or replaced very
slowly.
For more information, visit www.nahb.org.
