Disaster loan forgiveness program established
by Wally Northway
Published: January 18,2010
MISSISSIPPI GULF COAST — Federal regulations have been finalized that will allow Mississippi communities to apply to have loans associated with Hurricanes Katrina and Rita forgiven.
The Federal Emergency Management Agency (FEMA) has completed its work to establish a loan forgiveness program for the Gulf Coast, as authorized by Congress, after it became apparent that loan forgiveness was not included in the 2005 law that established specific recovery loans for the Gulf Coast. Congress rectified that inequity in 2007.
The rulemaking process got underway in March 2009 to determine the guidelines for forgiving loans in cases of significant community hardship. Both Sen. Thad Cochran (R-Miss.) and Sen. Roger Wicker (R-Miss.) had pressed the Department of Homeland Security to move forward to complete and implement the loan forgiveness regulations.
The rules will amend FEMA’s Special Community Disaster Loan (CDLs) regulations to include loan forgiveness procedures and requirements for Hurricanes Katrina and Rita. Under the new regulations, a local government that received CDLs from FEMA following Hurricanes Katrina and Rita can apply for forgiveness of all or part of those loans if its revenues in the 36 months following the hurricanes were insufficient to meet its budget requirements.
FEMA will begin working with the Mississippi Emergency Management Agency next week to begin the implementation process. Prior to the mid-March timeline for accepting applications, FEMA also plans to meet with communities to review documentation requirements and procedures.
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