An excerpt from the Clarion Ledger article:
The good news is that this bill, if passed, would create a grant that would give homeowners up to $25,000 to help pay for “flood damage” from the storm surge.HB 41 would create the Mississippi Disaster Home Flood Grant Fund to grant a maximum of $25,000 to homeowners whose houses flooded in the storm surge from Hurricane Katrina and they did not have flood insurance. A requirement for the grant would be that residents have to take out disaster assistance loans from the Small Business Administration.
But did you notice the catch? To qualify for the grant, residents have to take out loans from the SBA. Now, as a small government kind of guy, I’m conflicted over all of this in the first place. But lets set that aside for a moment and think about the people who might be applying for this grant.
According to this site, the average home price in Harrison County is $120,143. In Gulfport it is $113,747. In Biloxi it is $125,421. In Ocean Springs it is $129,575. Nearer to the water (and subsequently nearer to the damage) the values are considerably higher. Anyhow, lets use the averages and say a homeowner/mortgage-payer who needs this grant has put 20% down on their home and paid down the mortgage for 5 years. This hypothetical Biloxi/OS/GPT homeowner in need of a grant has remaining debt of ~90,000 dollars, 25 years left on a 30 year loan at 5.5% and no house. Based on a $90/sf cost (before hurricane inflation and new building codes), to rebuild a 1,700 square foot home would be around 153,000.
153,000 Rebuilding Cost
- 25,000 Grant
+90,000 Original Debt
218,000 Total Debt
160,000 Rebuilt Value?
- 58,000 Differential
Before the storm the homeowner’s mortgage payment was around $550/month. Now to live in the same place in a comparable home, the payment is nearly $1,240/month, 225% more than a month ago AND in this example they have negative equity.
Now, I suppose the real estate market will adjust and comparable home prices will simply inflate to reflect the increased cost of ownership IF there are people who can afford to pay those kind of prices. But whether that happens or homeowners are left paying more than their homes are worth may be irrelevant if those same people can’t afford either scenario.
Now, I know that the MS legislators intentions are the best and they are likely trying to prevent abuse of the system. But frankly, people don’t need more debt. We need real relief (preferably from the insurance companies and not the state) and tying the state relief to additional debt will only increase the burdens of these people. If the homeowner in the above example could miraculously find a way... pool his own savings, this grant, maybe some other grants/gifts and not incur any more debt, why should the government discourage him from doing so?
Ya’ll tell me what you think. Am I being belligerent? Does the example hold water? Am I missing something?
B
3 comments:
It is so hard for me to write you about this--yes, yes, Yes, it stinks--and you have to do your level best, honestly, consistantly, to get the full benefit you are owed. And even harder, Jesus wants us to show them the love of God amid our pain... very very hard!
But the downside is, yes, life isn't fair, God has put this in your life to teach you to depend on him. One of the most cheerful people I know lived in CA, and his entire house, and 5000 books-- he is a seminary president. They rebuilt, and without the kind feelings of the Nation, and love and support of the entire church focused on them. He's the most joyous guy I know --but it took time to recover... and I know from my own experience it wasn't until after everything was fixed, 6 months, I felt right again....
Yes, I agree, the need to demand (lovingly, but demand) fairness and justice from adjusters.... the whoel situation, it's crazy-frustrating, and many people will lose thousands. Even with water/flood coverage, etc. one has to keep at them--a nd it is tremendously draining.
I learned some things while I was getting the place repaired... I got the best customer service when I realized what it was like to be on their end of the phone--getting calls, being cussed out, by thousands of angry people.
Some of my neighbors have gone a year without being back in their houses... but they have not glorfied God for saving their lives, just focused on all the bad things, the losses...
How will your response be different?
They are out about the same amount you mentioned.
In the meantime, I've been giving to co-workers who travel to your area to help with the food/water relief efforts...
I am also giving via the church, and am considering housing folks affected by the storm....
It so God that God will provide for us, and that He's given us this chance to love with more than just words....
I'm praying for you, your wife, and church folks.
God Bless,
www.clousfamily.com
RBDL-
Thanks for the encouragement. I pray our response is different from the world. I wrestle with the tension between knowing how to honestly convey our struggles and reminding people that God is sovereign- that our trust is in Him and that our hope is not in this world and its stuff. There are two temptations in this tension:
1 is to wallow in self-pity and as you said fail to glorify God for His goodness
2 is to put on the goggles of fatalism and try to lay responsibility for evil at the foot of an entirely good God in the name of His sovereignty
There's a Jerram Barrs sermon from after the Tsunami that I'll try to post a link to that addresses how we, as Christians, are to respond to this sort of tragedy.
Cager-
The Taylor solution sounds reasonable enough... but I'm not sure that will ever see the light of day as law. 1st of all, will the insurance lobby allow it? And 2nd it is difficult lately to discern which bills are proposed for political posturing only and are never intended to pass. Taylor can gain abundant political capital among his constituents by giving lots of lip service to this proposal, all the while knowing (maybe even intending) that it will not pass. I hope it does, but as usual I'm skeptical of the gov't.
One of the most frustrating things for me right now is that insurance companies seem to be selling services they rarely intend to deliver. They're in the business of collecting premiums, not paying claims.
I understand that in the 1st half of 2004 after paying claims from Ivan, the industry still had a net profit (after tax) of over 24 Billion dollars. That's possible becuase of the fine print in policies that narrowly constructs scenarios where claims are paid using 'exclusions' and then insurers use the ambiguity in people's losses to deny the claim. Was it wind? Was it water? Well, only God knows (and maybe somebody who was crazy enough to stay and lived to tell about it). But the policies are written in such a way that they rarely pay.
Maddening.
Good point on the need to tie the grant to a loan... I hadn't fully considered the possibility of someone taking the grant and then defaulting on their loan.
However, the 'low interest' SBA loan is not exactly truth. This quote is from the SBA Hurricane Disaster Assistance fact sheet (http://www.sba.gov/disaster_recov/DisasterRecovery.pdf)
"For applicants unable to obtain credit elsewhere the interest rate wonʼt exceed 4 percent. For those who can obtain credit elsewhere, the interest rate is no more than 8 percent. The SBA offers terms of up to 30 years for repayment. Terms are determined case-by-case."
So, I think what that means is that if you have good credit, you get a market rate up to 8%. If you have bad credit you get a rate of 4% or less.
I don't know where the state is planning on coming up with all this money either. Like I said, I'm conflicted about what the state's role should be in any of this, especially a poor state (before the storm) that has lost a significant chunk of its tax base.
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