Hurricane Katrina: Legal Issues - Columbus School of Law

Other inconsistent state laws are temporarily suspended.
Miss. Code Ann. § 89-1-319 provides that any laws that are inconsistent with the relief available under Miss. Code
Ann. § 89-1-301 et seq. are "suspended" for two years after the disaster is declared. This includes a tolling of any
applicable statutes of limitation. However, this section also provides that if a mortgage obligation is "renewed" or
"extended" by agreement for more than one year after the disaster declaration, or if there is an agreement to pay
monthly installments for a period of more than three years, the protections available under these statutes do not
apply.
State law protection does not apply to federal mortgages.
Miss. Code Ann. § 89-1-323 provides that the protection afforded under Miss. Code Ann. § 89-1-301 et seq. does not
apply to any mortgages held by the United States or any agency thereof. Federal agencies, such as Rural Housing
Authority (formerly Farmers Home Administration) typically have procedures through which homeowners may ask
for forebearance, a moratorium, or other accomodation on their mortgage payments. The Federal Housing
Administration and the Veteran's Administration have asked lenders holding FHA and VA guaranteed loans to
establish a ninety day moratorium on foreclosures for those whose property or income earning ability was affected by
the disaster. Homeowners should contact their lenders directly to determine what relief is available.
Other than conventional financing, what types of loans are available to help replace personal
property or rebuild a home or business damaged as a result of a disaster?
Affected individuals may be eligible for assistance in the form of a low interest loan from FEMA, or a Disaster
Assistance loan from the Small Business Administration or Farm Service Agency. The availability of this assistance
may be based on factors such as the cost to repair the damage, availability of conventional credit, ability to repay,
and any insurance benefits available to you. [See FEMA SECTION.] The deadline for loan applications to the SBA
relating to damage to homes, personal property and businesses caused by Hurricane Katrina is October 28, 2005.
Timely applying with FEMA for assistance may be a prerequisite to participating in the various disaster relief
programs offered by the federal government.
Options for relocating and refinancing.
FEMA, in conjunction with the U.S. Department of Housing and Urban Development, is providing various types of
emergency housing for disaster victims. Reconstruction loans are also available for those in the disater areas.
Mortgage Insurance for disaster victims is offered by the Federal Housing Administration through Section 203(h), to
help disaster victims recover by making it easier for them to get mortgages. This program, which resembles the
conventional FHA mortgage insurance program, provides mortgage insurance to protect lenders against the risk of
default on mortgages made to qualified disaster victims. No downpayment is required, and borrowers are eligible for
100 percent financing. Closing costs and prepaid expenses must be paid by the borrower in cash or paid through
premium pricing or by the seller, subject to a six percent limitation on seller concessions. HUD also offers the 203(k)
program which may include funds in a new mortgage to both refinance an existing mortgage and repair the dwelling.
What steps should be taken to prevent foreclosure of the home of someone who has died?
Federal privacy laws make it difficult for persons other than the borrower to obtain information on a loan. However,
if all borrowers on the loan are deceased, most mortgage companies will work with surviving family members. Some
items that the mortgage company may require are a death certificate, a copy of a will (if applicable), contact
information of the responsible parties, the social security number of the person(s) who will now be responsible for
the loan and insurance in the name of the estate or the new borrower(s). Some companies may require that an estate
be opened before any changes can be made. Family members should contact the mortgage company immediately to
determine their guidelines and requirements.