[StBernard] N O bank lending LRA loans in advance

[Westley Annis]

Can we get a bank in St Bernard with parish assistance to do same as
following article?  How cab we rally bank and parish attention to this idea?
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Wednesday, January 24, 2007
  
 Times Picayune

City loan program aims to jumpstart home rebuilding

By Michelle Krupa
Staff writer 

Aiming to jump-start neighborhood recovery by rushing cash into the hands of
displaced residents, Mayor Ray Nagin on Wednesday unveiled a
long-anticipated program to provide interim loans to as many as 1,000 New
Orleans homeowners awaiting Road Home rebuilding grants. 

Under the One New Orleans Road Home Fast Track Program, City Hall will
subsidize the closing costs and interest payments for six months on loans of
as much as $50,000 to homeowners, who in turn must vow to repay the money
upon receiving a grant from the state-run Road Home program, viewed by
critics as too bureaucratic and slow-moving. Bankers said turnaround time on
applications to the city program may be as short as one week. 

Though the loan program likely will aid only a small fraction of the 53,000
New Orleans homeowners who are expected to get Road Home money, Nagin said
he hopes it will spur enough activity across the city to boost the
confidence of residents who are are undecided about returning or uncertain
about when to begin rebuilding. 

The bridge-loan program is not designed to provide loans to residents
planning to take the Road Home's buy-out option or to owners of rental
property, mayoral aides and bankers said. 
The initiative appears to be the first effort by local officials in
Louisiana to help residents get past rebuilding delays spawned by the
sluggish pace of the Road Home process, state officials said. 

"This program will help our citizens get their lives back on track," Nagin
said, "which will in turn ... help accelerate the recovery." 

Applicants to the loan program must apply to the Road Home before getting in
line to tap the city-backed loan pool of $55 million, which will be
administered on a first-come, first-served basis through Liberty Bank and
JPMorgan Chase Bank. Applications became available at noon Wednesday at the
banks' branches in New Orleans, Baton Rouge and Jackson, Miss. 

Those who apply also must submit a copy of their Road Home application,
which the city-run program will use to estimate the amount of money
applicants will receive from the state. Officials said the estimates will be
based on methods similar to those used by ICF International, the firm
running Louisiana's $7.5 billion Road Home program.

Banks may lend more 

Though the loans are intended to bridge what has become a monthslong lag in
Road Home disbursements, bank executives who flanked Nagin during a
Wednesday morning news conference said the loans, which they will handle
like mortgages, also could provide homeowners - particularly those who used
all of their insurance proceeds to pay off their mortgage - with sufficient
equity to borrow the total sum they need to rebuild. 

"There are a lot of people who come into the bank who we say 'no' to because
they need that equity, they need that Road Home check," said John
Kallenborn, New Orleans regional president of Chase Bank. "The bottom line
advantage is we can now say 'yes' to a loan sooner than we otherwise could
to a consumer that really needed a Road Home grant." 

Officials said the bridge loan program also may help people who find the
actual costs to rebuild are greater than what they are awarded from Road
Home. 

Bankers said they will be willing to lend qualified applicants more than
$50,000. But homeowners would borrow any amount in excess of the city's
limit at the prime interest rate, currently 8.25 percent. 

Nagin also pushed the idea of rolling the no-interest loan into a larger
mortgage. He said residents who would not be inclined to take out a
traditional loan of any sum to begin major renovations might be encouraged
to forge ahead with the no-interest loan while they wait for a Road Home
check. 

"We want to put money is people's hand as quickly as possible," the mayor
said. "I talk to a lot of people on the street, and there's a lot of pent-up
demand for the Road Home checks." 

Though he described the fast-track program as a two-year pilot initiative,
Nagin stressed that its assets are "self-replenishing" and that the initial
goal of serving 1,000 homeowners could grow. The city seeded the fund with
$11 million in existing federal block grant money, and the banks agreed to
match the investment - at a rate of $5 for every $1 from the city or on its
behalf. 

Though he said he has not gotten any responses yet, Nagin said he is hopeful
that New York-based philanthropies that he visited last week will float as
much as $15 million to expand the pool to more than $100 million. 

"What we are trying to anticipate (is that) we may be oversubscribed pretty
quickly," Nagin said. "So we want to have more money right behind" the
initial $11 million investment. 

LRA officials support move 

Though Nagin sidestepped an opportunity to renounce the Road Home process
before a gaggle of news reporters, he stressed homeowners' desperate need
for a bridge-loan option, demonstrating the failure of the state program to
expediently assist residents. 

Admitting that the failings of the Road Home are "well documented," Andy
Kopplin, executive director of the Louisiana Recovery Authority, called City
Hall's program a "positive step" that encourages lenders to be aggressive in
supporting the recovery. 

Kopplin was not worried about the shortfall homeowners would face if bankers
overestimate the amount of money they should expect from the Road Home.
Though the city is footing the bill on interest payments for six months,
residents who don't pay back the loan within that period will be charged the
prime rate after the term expires. 

Kopplin said local bankers are well qualified to understand the elements of
the Road Home application as they relate to the loan. 

"To me, those are decent bets," he said. 

Walter Leger, chairman of the LRA's housing committee, lauded the City Hall
initiative. "This is exactly the kind of constructive input we're looking
for from local officials," he said. "We will do all we can to support the
city on the implementation." 

Though city and state officials generally praised it as a creative solution
to a tangle of red tape, the bridge-loan program also has met early critics.
Melanie Ehrlich, whose Citizens' Road Home Program Action Team has offered
myriad suggestions for revamping the grant-payment process, said Nagin's
initiative serves far too few residents and could engender resentment among
those who do not apply quickly enough and get left out. 

"It's too bad that the Road Home is not faster or more efficient or fairer,"
she said. "But I think the main big problem with this program is that it's
going to frustrate so many New Orleanians, and New Orleanians have already
had so much frustration. 

"I'm very sad to see that they're only going to help one in every 50
applicants," Ehrlich said, adding that the city should have invested its $11
million to help the state correct problems with the Road Home. 

Despite such criticism, a bevy of elected officials jumped on board for
Wednesday's announcement. Flanking Nagin at the podium were state Reps.
Jalilia Jefferson-Bullock, Juan LaFonta and state Sen. Ann Duplessis, as
well as City Council President Oliver Thomas and City Councilwoman Cynthia
Hedge-Morrell, who voted in support of the program as part of Nagin's 2007
budget. 

Riffing on the names of the partner banks, Thomas lauded the program as a
way to help homeowners act on plans their to rebuild. Until now, he said,
they have been held hostage to the pace of Road Home payments. 

"Our citizens have been chasing some liberty for about a year and a half
now," he said, "and finally liberty will come." 

Michelle Krupa can be reached at mkrupa at timespicayune.com or (504) 826-3312.