Re: Just in: People to be removed by force from New Orleans

"Has FEMA ever had to cope with losses of this scale before ? "


No...nor has the American taxpayer who will be footing the bill.

Meanwhile the banks are asked to care...ROFLMAO

Is this because the Government doesn't have the money to help? One war
too many maybe?

http://news.yahoo.com/s/ap/20050908/ap_on_bi_ge/katrina_mortgages_hk3_1&printer=1;_ylt=Av0CaTD1zNKSRq_D02ACGglv24cA;_ylu=X3oDMTA3MXN1bHE0BHNlYwN0bWE-

Banks Asked to Return Katrina Mortgages By Aleksandrs Rozens, Business
Writer
Thu Sep 8

In what may be a first for the U.S. housing market, banks are being
encouraged to return the most recent mortgage loan payments from people
displaced by Hurricane Katrina.

Freddie Mac, one of two government housing agencies, said Thursday it
has asked banks to return September mortgage payments already made by
anyone in the stricken areas. Also, the housing agency has asked
lenders to return any September mortgage payments if borrowers ask for
their money back.

"It is unprecedented," said Nicolas Retsinas, at Harvard University's
Joint Center for Housing Studies. "It is one more option for people who
have fewer and fewer options."

"I am not aware that it has occurred before," said Douglas Duncan,
chief economist at Mortgage Bankers Association. "At the end of the
day, everyone hopes all the borrowers will be able to return to a home
and meet their mortgage payments on time and be re-established in their
housing," he said.

Duncan added that "their incentives are aligned. If the borrower loses,
then the lender loses and the investors lose."

Freddie Mac made its recommendation to banks in an advisory letter.
That letter was sent to 2,300 loan servicers, bank arms that collect
monthly principal and interest payments.

The housing agency, based in Washington, also asked that lenders extend
the length of time borrowers can forgo monthly mortgage payments, known
as forbearance, to a full year.

If, for example, a mortgage payment was automatically drawn from a
borrowers account, Freddie Mac has asked servicers to return that money
to the borrower's bank account. If payment was made by check or by
other means, Freddie Mac is asking the lender to send it back upon
borrower's request. The policy applies to homes in disaster areas
designated by the Federal Emergency Management Agency.

"We will follow Freddie Mac's proposed guidelines. We encourage our
customers to reach out to us and contact us," said Alan Gulick,
spokesman for Washington Mutual which is in the process of identifying
what loans were affected by the disaster.

Fannie Mae, at midday Thursday, was unable to respond to inquiries from
the Associated Press asking if it would follow by encouraging similar
policies.

Freddie Mac and Fannie Mae are housing agencies created by Congress to
encourage home ownership. Both sell guarantees to mortgage lenders. The
guarantees of timely principal and interest payments allow lenders to
resell their home loans as securities to a wide range of investors like
mutual funds, central banks, insurers and hedge funds.

The new policy being encouraged by Freddie Mac applies only to loans
for which it provides guarantees. So, any investors holding securities
pooling Freddie Mac guaranteed home loans would not be affected by any
problems borrowers encounter.

According to a Freddie Mac spokesman, servicers can suspend loan
payments for the first 90 days. During that time Freddie Mac advances
the monthly payments to investors holding securities backed by the loan
payments.

After 90 days, lenders will decide whether to extend the forbearance
period to as long as a full year.

After that first 90 days, Freddie Mac will be responsible for principal
payments and bank loan servicing arms will be responsible for payment
of interest on loans each month that will be passed on to investors
holding the mortgage backed securities, according to a spokesman with
the housing agency.

At the conclusion of the forbearance period, borrowers will have a new
pay plan that will allow the borrower to catch up with their payments,
according to a Freddie Mac spokesman.

The new plan could involve lengthening the life of the loan or
increasing monthly loan payments.

In the case of a default, Freddie Mac will pay off the loan and absorb
the loss. The housing agency will try to minimize its loss by
collecting any mortgage insurance the borrower had or collecting from
any flood insurance policy, a Freddie Mac spokesman said.

On Thursday the U.S. Labor Department said an estimated 10,000 workers
who lost their jobs because of Hurricane Katrina filed for unemployment
benefits last week, the first of what likely will be hundreds of
thousands of displaced workers seeking benefits.

The Mortgage Bankers Association, an industry trade group, estimated
that 360,000 single-family mortgages in the four states were affected
by the hurricane and the ensuing floods.

.

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