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Freddie Buying $36 Million in Mortgages for Louisiana Storm Zones
By James Comtois
Freddie Mac is buying $36 million of Louisiana Housing Finance Agency tax-exempt mortgage revenue bonds for its investment portfolio as part of the $1 billion commitment it made last year to help finance the Gulf Coast's recovery from last year's storms.
U.S. Senators Mary L. Landrieu, D-La., and David Vitter, R-La., joined Freddie Mac president Eugene McQuade and officials from the LHFA to announce the nearly $36 million in new below market 30-year fixed rate mortgages and $1 million in downpayment and closing costs assistance to promote recovery in federally designated hurricane disaster areas and foster homeownership opportunities for police officers, teachers and qualified low-income borrowers.
"This $36 million investment in affordable mortgages is very good news for Louisiana families, particularly those most devastated by Hurricanes Katrina and Rita. I want to thank Freddie Mac and others in the state for their work to provide affordable homeownership for our citizens. I'm particularly pleased to see that some of this funding will benefit first responders. Our first responders and other essential personnel play such a key role in the recovery of south Louisiana, and this will continue the momentum as we rebuild and revive Louisiana's communities," said Sen. Vitter in a statement.
Sen. Landrieu agreed. "This is $36 million in critical new mortgage funding for Louisiana. Freddie Mac and the Louisiana Housing Finance Agency have stepped up as two of Louisiana's most reliable, willing and enthusiastic partners for rebuilding our storm-damaged homes and communities," she said.
"Today's announcement marks a new opportunity for families across Louisiana to achieve home-ownership and for storm victims to repair, build and reinvigorate their communities," said Mr. McQuade. "I want to thank Sens. Landrieu and Vitter, the LHFA and their colleagues for giving us the opportunity to work with them and to fulfill our Congressional mission to keep mortgage financing stable, liquid and affordable at such a critical time in Louisiana's recovery," he added.
Altogether the new bond initiative will provide an estimated 300 borrowers with 5.35% or lower 30-year fixed rate mortgages that can be used to repair existing homes or purchase new ones. In addition, subsidies from the Police Foundation, LHFA and $1 million from the state of Louisiana's federal HOME grant are being used to subsidize special mortgage set-asides with even lower rates for police, teachers, and low-income borrowers. In some cases, borrowers may be able to qualify for 30-year fixed rate mortgages with rates as low as 3.85%.
LHFA is giving special priority to federally designated disaster areas in order to add momentum to the state's storm recovery efforts and historically underserved parishes targeted for urban revitalization.
In an effort to help more borrowers caught in the 2005 storms, LHFA is waiving its usual first-time homebuyer requirement and raising its cap on home repair loans from $15,000 to $150,000 under special provisions in the 2005 Katrina Emergency Tax Act. To be eligible for the new mortgages, borrowers can earn no more than 140% of their area median income.
This announcement builds on Freddie Mac's ongoing effort to rebuild the Gulf Coast communities devastated by Hurricanes Katrina and Rita. Freddie Mac has also financed $120 million in Mississippi Home Corporation bonds, provided MHC with $900,000 to buy 35 travel trailer units for use as temporary housing for displaced families and more than $1 million for rental units and credit counseling to storm victims.
Additionally, Freddie Mac has adopted emergency policies that temporarily suspended mortgage collections from many single and multifamily borrowers affected by the storm, assured forbearance for National Guard members involved in recovery operations, financed as much as $300 million in pre-storm loans closed on homes in federally-designated disaster areas, and joined with the Freddie Mac Foundation to donate $10 million to hurricane relief organizations.
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