Tuesday, March 14, 2006

Foreclosures rare in Katrina-hit areas

Foreclosures have generally been rare in LA and MS areas hit by Katrina. Why? Three reasons: From MSNBC:
In general, homeowners with government-backed loans were allowed to suspend payments for 90 days after the Aug. 29 storm, and that period was extended for another 90 days, bringing it to March 1.

Federal guidelines, which are followed by most large lenders, then gave borrowers another 120 days before foreclosure proceedings could be initiated, bringing it up to July 1, as long as borrowers make a written commitment to work with their lender on bringing their loan up to date.

Two other reasons are based on the condition of the properties:

> Lenders, who are generally reluctant to foreclose on properties to begin with, have concerns over the extent of Katrina's damage

> Homeowners are locked in litigation with insurance companies over homeowner's and flood insurance claims.

Some good news, kind of:
Congress is providing relief that could allow many homeowners to bring their mortgages up to date and rebuild. Under a bill signed into law in December some homeowners in Mississippi can soon apply for grants of up to $150,000 to cover uninsured damages. The future is less certain for homeowners in Louisiana who suffered uninsured damages.
Interesting that Louisiana wasn't mentioned in the description of the December law. Hmmmm.

- P


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