WASHINGTON – 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 mort-gage 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," said Alphonso Jackson, secretary of the Department of Housing and Urban Development, in remarks prepared for delivery when the program is announced today.
"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 Nov. 23, Jackson extended a moratorium by three months, until Feb. 28, on foreclosures against FHA-insured families damaged by Katrina or Rita.
A freeze on foreclosures on FHA-insured Wilma victims lasts until Jan. 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 those 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 will be taxpayer funds.
The money will come from FHA insurance reserves funded by premiums paid by borrowers who have FHA-insured mortgages, the officials say.
Ultimately, the homeowners will have to repay the FHA, but under very generous terms. The federal mortgage payments will be interest-free loans not due until the homeowner's original FHA-insured mortgage is paid off.
Also yesterday, officials at the Domino sugar refinery near New Orleans, which sustained heavy damage from Hurricane Katrina, announced plans to reopen Dec. 12 with the majority of its work force back in place.
Before the storms, the refinery employed 330 workers. It will resume operations with 298 workers, all of whom were employed before Katrina. Domino is housing most of them in Federal Emergency Management Agency trailers on a leased tract of land next to the refinery.
