Reports - Mississippi Renewal

66 | AFFORDABLE HOUSINGmendations in this section, therefore,pertain to the goals of identifying andsecuring funds to subsidize affordablehousing along with reducing other financialbarriers to home ownership.Recommendation 16: HurricaneStress Mortgages. Existing mortgageprograms will serve some, but not all,residents. Insurance settlements can beheld pending FEMA resolutions, whichhave taken as long as 36 months in pastdisasters, and SBA programs may notcover the full replacement or repaircosts. Consequently, it will be importantto develop programs which addresspopulation segments with known difficultiesin recovering their pre-Katrinahousing situation: elderly homeownersthat experienced severe loss, homeownerswith mortgages whose settlementsand current income do not leave themwith enough resources to rebuild withoutfiling bankruptcy, and individualswhose credit is too poor to allow themto qualify for SBA funding.Many low-income homeowners arelikely to be uninsured or underinsured,while renters generally have limitedcash for down payments. In addition,borrowers will face difficulty meetingtraditional mortgage criteria due tohurricane-related issues such as unsettledinsurance claims on existing mortgagesor late payments due to incomedisruption. Even people with strongcredit may lose their homes due to theinability simultaneously to pay for anexisting mortgage on a damaged property,for temporary housing, and for rebuildingcosts to either replace or repairdamaged property. The flooding causedby the hurricanes in non-flood zones,where flood insurance was almost nonexistent,has only exacerbated problems.Non-predatory mortgage products withflexible underwriting features, whichNon-predatorymortgageproductswith flexibleunderwritingfeatures,which takeinto accounta borrower’spre-hurricanecredit historyand factor inother effectsof the disaster,will be neededto ensure thatlow-incomeindividualsand familiesparticipatein the longtermrecoveryof theircommunities.take into account a borrower’s pre-hurricanecredit history and factor in othereffects of the disaster, will be needed toensure that low-income individuals andfamilies participate in the long-termrecovery of their communities. Theseproducts could be used by those facingmortgage defaults or foreclosure, or bythose who have no other means to purchasea home.For this recommendation, EnterpriseCorportion of the Delta has an establishedmortgage program that workswith local banks, mortgage companiesand brokers. The mortgage productsprovide flexibility for residents displacedby Katrina. As additional flexibilityis needed, the state along with otherhousing agencies should work togetherto suggest changes to the secondarymarkets. If necessary, the state may offerto act as an additional guarantor forsuch mortgages. This recommendationshould be implemented within six to 12months to assist residents as they transitionfrom temporary to permanenthousing. There is very little cost associatedwith this proposal, primarily administrativecosts on the part of lendinginstitutions. The most important factoris the willingness of mortgage brokersto revisit their risk analysis accountingprocedures to consider extenuating circumstancesin the aftermath of HurricaneKatrina.Recommendation 17: CDBG/HOME Grants. Existing programssuch as the CDBG disaster relief andHOME funds are well suited to providegrants to rehabilitate damaged homesand to assist homeowners who experiencegaps in insurance and FEMA coverage.Additionally, these funds shouldbe used as forgivable second mortgagesto make home ownership affordableand to help residents build equity. To