[StBernard] Question for SBA

[Westley Annis]

I sent the following email to SBA..  Still waiting for an answer.. Perhaps
the Council would have better luck at getting an answer..

 

SBA - We're confused.  We, like thousands of other homeowners that were
devastated by Hurricane Katrina, are bewildered by what seems to be a
"penalty" posed on those of us that received some type of insurance proceeds
for our destroyed homes.  We'd like to get the rationale as to why the
amount that we paid to our current mortgage company, thereby, eliminating a
mortgage on an uninhabitable house, is deducted from the loan amount we're
approved to receive unless we receive a "Demand for Payoff" letter from the
mortgage company.

 

What confuses us is that it appears that the choice the Government / SBA
wants us to make is between having (2) loans, one to our current mortgage
company and the other to the SBA or receiving a lower loan amount from the
SBA.  With our assumption being that the SBA was here to help us recover
from this crisis, this doesn't make sense to us.

 

To help you understand our confusion, we'll provide you with an example:

 

*	Let's assume that the SBA determines the damage to the destroyed
house is valued at $200,000.
*	Let's now assume that there is a $65,000 mortgage owed to the
mortgage company.
*	Now, let's assume that $175,000 is received from the insurance
companies.
*	Now, taking the common sense approach, the mortgage is paid off,
thereby reducing debt and leaving approx. $110,000 in which to rebuild.   

 

Now, the reason for our confusion.  We are being told by an SBA
representative that unless we receive a "Demand for Payoff" letter from our
mortgage company the loan amount that we're eligible to receive from SBA
will be reduced by the entire insurance proceeds, $175,000, instead of the
$110,000.  That, doesn't make sense to us. 

 

So, we ask again.  Please provide us with the rationale for the "Demand for
Mortgage Payoff" letter.

 

 
Roy