(UPDATED Oct. 14, 2005) – Freddie Mac and Fannie Mae, which announced 30- to 90-day moratoriums for their multifamily borrowers hit by Hurricane Katrina, quickly announced help for their single family customers hurt by Hurricane Rita, but multifamily help lagged. Now, Fannie Mae has announced a month-to-month forbearance for Katrina and Rita multifamily borrowers, to be dealt with on a case-by-case basis. Freddie was expected to follow suit, but at press time had not made an announcement.

For Katrina sufferers, Freddie Mac is offering a 90-day moratorium on principal and interest payments to borrowers with properties in the areas that have been designated by the Federal Emergency Management Agency (FEMA) as major disaster areas that qualify for assistance. Freddie suggests that borrowers contact their Freddie Mac seller/servicer for details.

Fannie Mae said it will offer a 30-day relief period for multifamily borrowers. Because of Fannie's risk-sharing structure with its lenders, borrowers should contact their loan servicer (the company to which they send their monthly mortgage payment) for more information. The relief deals are done on a case-by-case basis.

Legislation under consideration by Congress to toughen regulatory oversight of Freddie and Fannie may ultimately be tied to the Katrina recovery. The Washington Post reported Sept. 15 that leaders of the House of Representatives have proposed changing the House's legislation, which currently includes requiring the two government-sponsored enterprises (GSEs) to set up an affordable housing fund using 5% of their profits. The new proposal, if adopted, would change that into a 3.5% fund; during the first two years of the fund's five-year existence, priority for the money would be for projects in Katrina-ravaged areas.

But the fate of the fund and of the GSE legislation as a whole were still a big question mark as disagreements on Capitol Hill continued.

The chairman of the Senate Committee on Banking, Housing and Urban Affairs, Sen. Richard Shelby (R-Ala), issued a statement that poured some cold water on the fund plan. "There could be no more worthy cause than to direct much-needed federal assistance to the areas devastated by Hurricane Katrina," Shelby said. "...While I believe that using some type of affordable housing program to assist hurricane victims would serve a valuable purpose, I continue to harbor deep concerns about creating a housing fund that is based on the profits of the GSEs."

Shelby's comments reflect a concern among some lawmakers about the affordable housing provision, which stokes conservative fears that the GSEs could be induced to continue their growth — and therefore increase the perceived risk to the American economy — in order to meet the goals. The GSE legislation is awaiting floor votes in both the House and the Senate and though suporters of the bills hope to get it passed this fall, they're determined only to pass it if it remains a "strong bill," a spokesman for the Senate committee told HousingFinance.com.

The latest word from Washington is that the GSE bill could face a House floor vote in the last week of October.

Rebuilding goes on

President George W. Bush pledged Sept. 15 to use all available resources at the federal government's disposal to help Gulf Coast residents recover from Hurricane Katrina. Then Hurricane Rita hit, and criticism from his party's fiscal conservative wing has grown. The government has already allocated about $62 billion in emergency aid.

Key proposals in his plan involve making the Gulf Coast a special economic zone with benefits for investment, and creating an urban homesteading program for low-income residents.

Costs for recovery in the entire Gulf Coast area hit by the storms are estimated by some economists to be as high as $200 billion, but it is still too early to get a clear number until ongoing assessment efforts were completed. Insurers are still uncertain what their total liabilities will be. Congressional Republicans are also reportedly balking at the cost of the federal government's commitment to the recovery effort; they have asked the White House to indicate where costs can be offset to avoid inflating the federal devicit further.

To help developers plan their recovery, a special session on redevelopment in the hurricane zone will be held at AHF Live! The 2005 Tax Credit Developers' Summit, Oct. 24-26 in Chicago. For more information, go here. It will include information on how developers can help storm victims, as well as information on program assistance from federal and state housing finance agencies.

Recovery funds and planning

The apartment industry has begun to react with open arms to the great need to house the estimated 1 million people displaced by Katrina. Experts say there will be the need for short- and long-term housing for many hundreds of thousands of displaced Gulf Coast residents — some of whom may never return to their former homes.

NHT/Enterprise Preservation Corp., an organization sponsored by the National Housing Trust, the Enterprise Foundation, the John D. and Catherine T. MacArthur Foundation, and the Fannie Mae Foundation, opened up more than 200 two and three-bedroom apartments in Houston and Dallas for Katrina families, according to Michael Bodaken, president of the National Housing Trust. He told HousingFinance.com that the group was working with the Red Cross and the Salvation Army to provide immediate services to the families, and he praised the efforts of the Texas Apartment Association and the National Apartment Association in corralling the help of multifamily owners.

But many other people still need help. FEMA and the Department of Homeland Security have moved their housing clearinghouse to a larger Web site to accommodate the "overwhelming support" they have received so far, according to National Multi Housing Council President Doug Bibby. The site allows apartment owners and managers to post information on available units that can be rented to people displaced by Hurricane Katrina. Go to www.swern.gov.

Several state housing finance agencies have asked their constituents to help the National Council of State Housing Agencies, which is working with the federal government, to come up with plans for effective program assistance.

In other news

Here are some updates and resources for apartment professionals:

• The Federal Home Loan Bank (FHLBank) of Dallas, whose territory includes Louisiana and Mississippi, announced special disaster relief funding. Funds for its Economic and Community Development Program will be priced 10 basis points below their regular rates. Income eligibility limits have been expanded to 165% of the area median income. The FHLBank also is offering expanded hours of technical support. For more information, go to www.fhlb.com/whatsnew.html.
• HUD announced plans to find vacant multifamily housing, public housing and HUD-owned homes that could be used as temporary housing. It also said that recipients of Community Development Block Grants, HOME, and Emergency Shelter Grants can apply to HUD to have those funds reprogrammed for disaster recovery activities. For the latest on HUD efforts, see www.hud.gov/news/katrina05response.cfm.
• Some HUD offices have been closed by the disaster. Check the following links for updates on the availability of HUD staff in its regional offices: Alabama ( www.hud.gov/local/index.cfm?state=al); Florida: (www.hud.gov/local/index.cfm?state=fl); Louisiana ( www.hud.gov/local/index.cfm?state=la); Mississippi (www.hud.gov/local/index.cfm?state=ms )
• In 2004, after four hurricanes struck Florida and the southern coasts of the United States within one month, HUD provided more than $200 million in housing and community development relief. The Florida Housing Finance Corp. responded by prioritizing projects in disaster-hit areas in its next round of federal low-income housing tax credits (LIHTC). Developers in areas hit by Katrina should watch their state housing finance agencies in coming months to see how much of their LIHTC allocations will be devoted to hurricane recovery and whether they will have special assistance programs.
• The public finance group of Moody’s Investors Service is reviewing the possible effects of the disaster. The company noted that there currently is “not enough information … available to assess the ultimate impact and recovery period of the hurricane.” But it said that past experience has demonstrated that the natural disaster in itself might not result in a decline in long-term credit quality of institutions.
• The Internal Revenue Service (IRS) has offered some relief in the form of extended filing deadlines for taxpayers in stricken areas. For more information, go to www.irs.gov/newsroom/article/0,,id=108362,00.html. The IRS also announced a telephone number for use by taxpayers affected by Hurricane Katrina who need help with tax matters: 866-562-5227.
• The Louisiana Housing Finance Agency customers should check its Web site (www.lhfa.state.la.us) for updates. The Mississippi Home Corp., that state's housing finance agency, also updates its Web site with useful info (www.mshomecorp.com).

To learn the latest on conditions in the storm area, visit the Web site of FEMA (www.fema.gov/). Go to the Affordable Housing Finance blog for apartment industry updates on the hurricane aftermath.