New Orleans Residents Slow To Re-Build Post-Katrina; Will Gustav Make It Worse?

31 Aug New Orleans Residents Slow To Re-Build Post-Katrina; Will Gustav Make It Worse?

On the brink of a new threat from Hurricane Gustav, many residents of New Orleans have yet to rebuild their homes and resettle their lives after Hurricane Katrina, partially due to the credit crisis and the resulting tightening of restrictions on lending.

In addition, many residents who have not been able to return to their homes have still been burdened with their mortgage payments – even as they reside in rented apartments or in FEMA trailers. In many cases the residents have been unable to afford their mortgage payments at all or have not been paying them on time.

Consequently, the hits to their credit have made them less than ideal candidates for loans. The lack of loan eligibility only perpetuates the cycle that will further stall rebuilding and recovery in the city.

According to a report compiled by PolicyLink entitled A Long Way Home: The State of Housing Recovery in Louisiana, published earlier this year, a whopping 81 percent of residents who chose to rebuild their homes on their existing lots have not completed that task due to inadequate funds as of June 26, 2008.

The authors of the study suggest an increase in the availability of federal funding and the extension of federal assistance programs that are scheduled to end in 2009, such as tax credits to be used to subsidize rental properties.

There is no telling whether increased assistance efforts would even be enough, with the weak economy and hurricane season just beginning for 2008. But everyone can agree that something needs to be done to further strengthen the recovery efforts and help residents avoid bankruptcy and foreclosure.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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