More Than a Year After Katrina, Mississippi Mortgage Holders Still Struggle

A homeowner’s grant would make it easier to rebuild his flooded King Avenue home, Pascagoula, Miss., resident Stephen Breland figured.

He never imagined that the federally funded grant would actually double his monthly Mississippi mortgage bill and reduce the loan he received from the Small Business Administration (SBA).

Breland’s home in the Chipley neighborhood, six blocks from the Gulf of Mexico, was flooded with four feet of water after Hurricane Katrina.

“I thought the Homeowner Grant Program was great, because nobody owed me anything. I was outside the flood plain and thought I didn’t need flood insurance,” Breland told the Mississippi Press.

Breland said he had no outstanding debts and wasn’t behind on his monthly mortgage payments. The grant would go straight to the SBA, which had approved Breland’s request for a debt consolidation mortgage.

“We didn’t want to have two mortgages. We knew flood insurance was going to go up. Then when our policy came up for renewal, the rate hikes started kicking in. We can’t go to another company. They’re not writing policies down here. It’s expected to go up nearly 400 percent,” Breland said.

The result, Breland says, is a monthly mortgage that has increased by more than $200. In addition, Breland said the Small Business Administration decided not to consolidate his mortgage. The reason is a federal law that prohibits duplication of funds for disaster victims. It prevents victims from receiving financial aid from multiple sources for the same loss.

The law is in place to prevent the home mortgage holder from being burdened by debt, SBA spokesman Carol Chastang said. The SBA says Breland’s loan and grant money are both for structural damage his home suffered in Katrina. Breland says he claimed no structural losses on his income taxes.

“And you know what SBA had the nerve to tell us? That if we had not closed our grant so soon, they would have given the loan to us. But what would you do if you’ve got your grant papers, saying you can close your grant?”

“Once I got information about my grant, I went and closed. I thought I was doing the right thing. It caused the SBA to pull back what they offered me. So they’re not paying off my primary mortgage. Now I have an SBA note, plus a higher mortgage note for the next six or seven years,” Breland said.

Breland considered declining his homeowner’s grant, but he said SBA told him not to.

“Because that’s money back to them,” he said.

Because of their homeowner’s grant, Breland will have a smaller SBA loan to pay off.

“I’m very grateful for owing less, but I’m really upset they could change the rules because of their inefficiency and mistakes,” Breland said.

Breland had expected to close on his SBA loan in July.

However, five different SBA representatives have tried to work with Breland since he applied for a loan last May, he said. The agency also lost a $280 check he sent them for a title search and didn’t find it until six weeks later.

Officials with Mississippi Development Authority, the agency in charge of the Homeowner Grant Program, have said SBA glitches are one reason why the program has been frustrating for grant applicants.

U.S. Sen. Trent Lott has called SBA’s computer system “a disaster” and has said that the agency’s problems are an issue in both Louisiana and Mississippi.