How to Promote Homeownership in Post-Katrina New Orleans
Please click here for Michael's detailed recommendations on these topics:
Recommendation 1: Hurricane Stress Mortgages
Existing mortgage programs will serve some, but not all, residents. Insurance settlements can be held pending FEMA resolutions, which have taken as long as 36 months in past disasters, and SBA programs may not cover the full replacement or repair costs.
For this recommendation, we need to establish a flexible mortgage program that works with local banks, mortgage companies and brokers. There is very little cost associated with this proposal, primarily administrative costs on the part of lending institutions. The most important factor is the willingness of mortgage brokers to revisit their risk analysis accounting procedures to consider extenuating circumstances in the aftermath of Hurricane Katrina.
Recommendation 2: Section 8 Voucher Opportunities
Using FEMA payments combined with HUD rental vouchers and other subsidy funds, Hurricane Katrina has provided an opportunity for Section 8 voucher holders to become homeowners. Steps should be taken by local housing authorities to explain the process of qualifying for a mortgage loan to their voucher holders. Those who qualify would be able to purchase a home with minimal down payment and in many cases could own a home for the same monthly cost as their rental payment.
Recommendation 3: Create a Combined Fannie Mae Mortgage Product
Fannie Mae currently offers energy-efficient mortgages under one program, and location-efficient mortgages under a separate trial program. Location-efficient mortgages are based on the idea that if one lives within a walkable neighborhood, or close to transit, then one does not necessarily need a car and can afford to spend a higher portion of income on housing. We request that Fannie Mae combine these mortgage programs, along with a housing durability component, into a single housing efficiency mortgage product. Additionally, in contrast to Fannie Mae’s existing products, this program should qualify homeowners for a lower interest rate, as opposed to a larger loan.
Recommendation 4 : Future Property Tax Rebates for Efficient Housing
With location- and resource-efficient housing, local governments over time will spend less on utilities and infrastructure such as roads or sewer lines. For this reason, they should be able to offer reduced property taxes on units that are located in high-density mixed-use neighborhoods, are located near transit, or use energy and water at high levels of efficiency. Local governments should offer lower property tax rates after 2008 for all homes that reduce their needs for infrastructure.
Michael T. Gray
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