Emergency Mortgage Aid For Katrina Victims
TONY HARRIS, CNN ANCHOR: Now in the news, time is quickly running out for four Christian humanitarian workers kidnapped in Iraq. The kidnappers have demanded the U.S. and Iraq release Iraqi prisoners by today, or else, they say, they will execute the hostages. Muslims around the world are urging the captors to release the hostages. Antiwar protester Cindy Sheehan is urging the kidnappers to release those Christian workers during an antiwar conference in London today. She says she doesn't think kidnappings will help the insurgents in the U.S. occupation in Iraq. But Sheehan said she knows what her government is doing is wrong, and she is trying to stop it. It is a busy day in the Windy City. Crews plan to move the Southwest Airlines jet involved in Thursday's deadly accident at Chicago's Midway Airport. NTSB investigators say they're beginning to conduct interviews. The plane slid off the runway during a snowstorm Thursday night and into a busy intersection. A 6-year-old boy was killed, and 13 others were injured. Coming up next, Gerri Willis with "OPEN HOUSE." We will be back with more news in 30 minutes.</s>GERRI WILLIS, CNN ANCHOR: This week, you're probably thinking about holiday shopping. We'll have some great information on gift certificates. Plus, what you need to know now about holiday safety and your home. Good morning, I'm Gerri Willis. Today on OPEN HOUSE, we'll start with a more serious topic, the need for emergency mortgage aid in the wake of Hurricane Katrina. Keith Oppenheim gets us started.</s>KEITH OPPENHEIM, CNN CORRESPONDENT (voice-over): Leona Grandison (ph) walks into the home she bought four years ago, in a neighborhood devastated by flooding from Hurricane Katrina. Now, mold is everywhere. (on camera): Can you get this stuff off? Can you get rid of it?</s>LEONA GRANDISON, HOMEOWNER: No. You have to take...</s>OPPENHEIM: Do you have to get rid...</s>GRANDISON: ... take that whole wall out here up to about this here.</s>OPPENHEIM (voice-over): The cost of fixing the damage, she estimates, would be at least $20,000. Leona's mortgage lender gave her a break on payments for a couple of months, but anytime now, she says, she may have to resume making payments on a home she can't live in yet.</s>GRANDISON: You have to pay the mortgage payments whether you're living in it or not.</s>OPPENHEIM: In a different New Orleans neighborhood -- wealthier, but just as devastated -- City Councilman Jay Batt is facing a similar problem. (on camera): Is this the way in, Jay?</s>JAY BATT, NEW ORLEANS CITY COUNCILMAN: This is the way in, through that door.</s>OPPENHEIM: That was your door.</s>BATT: Come on in.</s>OPPENHEIM (voice-over): His home is also in the process of being gutted. And like Leona, he's got financial pressures. Jay resumed making monthly house payments. (on camera): It's fair to say that, over the next year you would spend somewhere between, say, $20,000 to $30,000 in mortgage payments for a home you can't live in.</s>BATT: That's correct. That's correct. And that's difficult, and while paying for an apartment.</s>OPPENHEIM: Jay Batt knows he's in better shape than folks like Leona Grandison. He has income from a franchise of clothing stores.</s>GRANDISON: Basically, this is everything I had.</s>OPPENHEIM: But she has really lost everything. Her business, the Candlelight Lounge in the city's historic Tremaine (ph) neighborhood, has been looted by thieves and ravaged by floodwater. Leona has mortgage payments coming due here as well. The two payments are hefty.</s>GRANDISON: Almost $2,000 ...</s>OPPENHEIM (on camera): Two thousand bucks a month, basically.</s>GRANDISON: Right.</s>OPPENHEIM: And you don't have income.</s>GRANDISON: No income.</s>OPPENHEIM (voice-over): Throughout New Orleans, and throughout the Gulf Coast, thousands upon thousands of homeowners are in the same fix. (on camera): They owe on a home that is uninhabitable. In response, the Federal Housing Administration is launching a program to pay for mortgages for as many as 20,000 victims of Hurricanes Katrina, Rita, and Wilma for up to a year. But across the region, that represents only a fraction of the people in need. (voice-over): As a city councilman, Jay Batt is calling upon the government to extend bridge loans so small-business owners can rebuild, and then earn the money to make their mortgage payments.</s>GRANDISON: You know, we're not looking for ridiculous handouts or anything, but just an opportunity to put our lives back together.</s>OPPENHEIM: Leona Grandison, now staying at the home of a friend, simply doesn't know how she'll put her life back together.</s>GRANDISON: But you got to keep the faith and be strong, or else you won't survive.</s>OPPENHEIM: And she is remarkably optimistic, especially for someone who is facing big bills, and for the moment, has no way to pay them.</s>OPPENHEIM: By the way, Leona Grandison has three children, and she tells me that she may have to rely on her family to make her mortgage payments. And the other thing to point out, Gerri, is that people like Leona Grandison and Councilman Jay Batt, who have had these deferments for a couple of months from their financial institutions, they're going have to pay what they haven't paid over the last few months. And that may be saying the obvious, but in the cases where some folks don't have any income, like Leona right now, that can be a pretty tough thing, especially if she is required to pay in a lump sum. She'll find that out, Gerri.</s>WILLIS: Boy, Keith, I tell you, it is tough out there for people who have had their homes destroyed or even just severely damaged. How flexible are the lenders being?</s>OPPENHEIM: I think that's an important thing to ask, because it does appear that financial institutions are trying to show some flexibility. When Leona talks about her banks, she's giving me the impression that they are trying to be fairly flexible, because they know that a lot of people who owe on their mortgages can't pay because their livelihoods have been destroyed. But we are in this sort of very in-between time right now, where we don't have the answer. They don't have the answer, and it appears that financial institutions are mulling over the options.</s>WILLIS: Keith, thanks for that report. We appreciate it. So are mortgage lenders really doing enough? Joining me now from Washington is Jay Brinkmann of the Mortgage Bankers Association. Jay, welcome.</s>JAY BRINKMANN, MORTGAGE BANKERS ASSOCIATION: Thank you. Glad to be here, Gerri.</s>WILLIS: You know, the moratorium on mortgage payments is ending, and people who endured the devastation of the hurricanes now could have another catastrophe on their hands, losing their home. In fact, we know that foreclosures in the area are mounting. As a matter of fact, HUD told me this morning that as many as 52,000 people, homes, are being foreclosed on in the area. What are mortgage bankers doing to help these people?</s>BRINKMANN: Gerri, if we go back to the very days after the storm, the mortgage industry realized that we had never had to deal with a situation like this. A lot of it, we've been playing it by ear. It was initially obvious, people were in a state of confusion...</s>WILLIS: Right.</s>BRINKMANN: ... trying to get their families back together. It was clear, we've got to go with an across-the-board moratorium, get everyone lined up, because...</s>WILLIS: Right, and certainly those...</s>BRINKMANN: ... people were looking for families, but...</s>WILLIS: ... federal encouraged you...</s>BRINKMANN: Exactly.</s>WILLIS: ... with that moratorium, to put that in effect. And you did. But now, three months later, we see people, just as we saw a few minutes ago, still struggling. What is the industry doing?</s>BRINKMANN: What the industry is doing now is not really tightening up in terms of saying, OK, you have to pay us now. What the industry is saying is, the moratorium is over, but we need for you to tell us individually what your situation is. Literally, the mortgage companies have been forwarding hundreds -- no, tens of millions of dollars a month to make some of these mortgage payments on behalf of the people that have been paying to the ultimate investors. Now what they're saying is, instead of an across-the-board, tell us what your situation is. We don't want to be an impediment to growth, to redevelopment...</s>WILLIS: Right.</s>BRINKMANN: ... to reconstruction, where that can take place, because we want to work with people. But we have to talk with them. So...</s>WILLIS: But Jay, wouldn't it make more sense to have an across- the-board policy? I mean, it seems odd that everybody would be handled differently. So then it's up to me and my particular negotiating abilities to get the best possible deal I can? Is that the way it's working?</s>BRINKMANN: Remember that we've got many different mortgage companies, each with different requirements. There are some technical accounting issues that I really can't get into right now, or you'd lose your entire audience, that limits the ability of some companies to offer something across the board. But they can be much more flexible on an individual basis. So now what they're saying is, please contact us if you haven't already. Tell us what your situation is. We fully understand, if you're living in Houston, your spouse is in Atlanta, you're suddenly having to pay rent, private tuition ...</s>WILLIS: Right.</s>BRINKMANN: ... school tuition, this sort of thing, that's a circumstance, even though perhaps your house perhaps wasn't damaged. In other cases, as was in your story, that's an entirely other issue, where we look at...</s>WILLIS: Well, what kind of solutions ...</s>BRINKMANN: But ...</s>WILLIS: ... are you providing? Are you going to stretch out the payments over more years? Are -- is there any forgiveness involved? You know, Jay, we saw this interesting situation this week, where the Department of Housing and Urban Development came out and said, Hey, we're going to pay mortgages for a month for people who have some of the loans that we're involved in, the FHA loans. How much forgiveness can the mortgage industry give, if any? Let's face it, the industry has had a few good years. Is it time to step up?</s>BRINKMANN: What the industry, again, wants to do, and what all of the mortgage industry wants to do, is to support the rebuilding activities, to work with the borrower and say, What do you really want to do? What is your insurance coverage? Remember that, in these situations, the New Orleans market, parts of the Mississippi market, land values actually represent a much larger share of the total home value...</s>WILLIS: Right.</s>BRINKMANN: ... than we've seen in the rest of the U.S. So there's still value there...</s>WILLIS: But at the end of day, having a backyard and no place to lay your head is cold comfort at this point. Anything else the industry will be doing, besides working individually, to communicate just what kind of solution might be available?</s>BRINKMANN: One of the things we've done is, we have a Web site called the Home Loan Learning Center, that -- HomeLoanLearningCenter.com -- that people can go to if they don't know the number of their mortgage servicer. It has some answers up there for people as to what some of the alternatives are, again, to get them back to their mortgage lenders, and work on the situation to solve their own particular case.</s>WILLIS: Jay, thanks so much for being with us today.</s>BRINKMANN: Thank you.</s>WILLIS: A new report says a huge number of jobs will be lost as the housing market slows down. At risk, some 800,000 jobs in construction and banking, according to the Anderson Forecast, a quarterly report from the University of California. Even so, what most people are still complaining about is the high cost of housing. In fact, many of you say it's time to move. For example, 45 percent of people on New York's Long Island say they're likely to move within the next five years. A quarter of everybody in Massachusetts would bail out right now for the best opportunity. And 40 percent of Hawaiians say home prices may push them out. California is already losing about 100,000 residents a year. Where are they going? The Midwest, where they can get more house for the money. Coming up on OPEN HOUSE, it's not just the thought that counts. It's the fine print too. We'll have the lowdown on gift cards. And later, may all your Christmases be bright and safe. I'll show you how to avoid some common household dangers. But first, your tip of the day.</s>WILLIS: You can save money in the long run with an energy- efficient mortgage. They enable you to finance the cost of a major renovation, like adding solar panels that will save you energy. That means you'll have lower utility bills, more cash in your pocket, and therefore, qualify for additional mortgage money. And when it comes time to sell, your house will be more marketable. Energy-efficient mortgages are available in all 50 states. For more, check out the Department of Housing and Urban Development's Web site at Hud.gov. And that's your tip of the day.