NYT: Federal Loans to Homeowners Along Gulf Lag

[Pirate Smile]

Hundreds of thousands of Gulf Coast families, hoping to rebuild their homes after the hurricanes using low-interest government loans, are facing high rejection rates and widespread delays at the federal agency that administers the disaster loan program.


Albertha Hastens of White Castle, La., was turned down for a loan by the Small Business Administration, which cited her low income.

The Small Business Administration, which runs the federal government's main disaster recovery program for both businesses and homeowners, has processed only a third of the 276,000 home loan applications it has received.

And it has rejected 82 percent of those it has reviewed, a higher percentage than in most previous disasters, saying that many would-be borrowers did not have incomes high enough, or credit ratings good enough, to qualify. The rejections came even though the Federal Emergency Management Agency has referred more than two million people, many of them with low incomes, to the S.B.A. to get the loans.

To a large degree, that high rejection rate appears to reflect a mismatch between existing government aid programs and the large number of low-income people affected by this year's hurricanes. Despite the widespread poverty in the most damaged regions, the Small Business Administration has not adjusted its creditworthiness standards, which are roughly comparable to a bank's.

http://www.nytimes.com/2005/12/15/national/nationalspecial/15loans.html?hp&ex=1134622800&en=6f6c44069f820dda&ei=5094&partner=homepage

[Pirate Smile]

1. more

"In fact, the loans that have been approved appear to be flowing to wealthy neighborhoods in New Orleans but not to poor ones, according to a list of loans released by the government and mapped by The New York Times.

-snip-
The high rejection rate and the slow processing of applications are causing concern among government officials, academic experts and homeowners. Many say the problem undermines government pledges of aid, embodied by President Bush's promise in September to "do what it takes" to help citizens rebuild.

One such homeowner is Albertha Hastens, 55, a member of the school board in White Castle, La., which is between New Orleans and Baton Rouge. Strong winds damaged the roof and tore siding off her house, Ms. Hastens said, but the Small Business Administration turned her down for a loan, citing her low income. (She receives a small stipend from the school board along with her Social Security payments.)

"It makes you tired and disgusted," Ms. Hastens said of her experience with the agency. "For poor working people, you don't know what to do."

[Up2Late]

2. Disgusting eom

:mad:

[thecrow]

3. My ex is working for the FEMA/SBA down there

He says every homeowner has a story to tell, and it's just heartwrenching to hear the stories.
But he has heard the stories of only about 20% of applicants getting home loans from FEMA and that it has got them all disgusted. The SBA workers are only the ones who take the applications; not the ones who make the decisions.

[Pirate Smile]

4. kick

[bleedingheart]

5. Ironic - you can have tens of thousands in unsecured credit with

credit card companies.....no matter the income level...but to buy a home...you must meet a very limited set of criteria....but yet the bank can take that home if you can't make the payments whereas on unsecured credit they have nothing.

Buying a home should be easier.