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The Federal Emergency Management Agency (FEMA) is unprepared to house people in the event of a catastrophic disaster such as Hurricane Katrina, according to Richard Skinner, inspector general of the Department of Homeland Security (DHS), which oversees FEMA.  The Office of the Inspector General is responsible for auditing and critiquing DHS.

When people are displaced after a disaster, they often lose not only their shelter, but their way of life: their income, all of their possessions, and their communities.  Hurricane Katrina destroyed more than 300,000 homes and displaced about a million people, many of whom are still unable to return to their communities.  Property damage alone was estimated at over $100 billion. 

Affordable housing is the first and most critical step to disaster recovery.  Once people have reliable housing, they can begin to rebuild their lives. 

However, in a House Committee on Homeland Security hearing last week, Skinner stated that FEMA's high-cost temporary housing units, limited housing repair capacity, lack of clear goals and priorities for success, and lack of coordination with local and state authorities have crippled the agency's ability to respond to large-scale catastrophes.

Skinner said that in order for FEMA to be sufficiently prepared for a major catastrophe, the agency must find low-cost alternatives to using travel trailers for temporary housing, develop a plan for the quick restoration of affordable housing, and develop policies in collaboration with local and state authorities to clarify responsibilities for housing and relocating displaced people.

A new report by the National Community Reinvestment Coalition (NCRC) in partnership with the National Council of Negro Women (NCNW) shows that minority women are more likely to receive high-cost home mortgage loans than White women.

In many cases, disparities by race widened as income levels increased. The report finds middle- and upper-income African-American women to be a least twice as likely to receive high-cost loans as middle- and upper-income White women in more that 84 percent of the metropolitan areas examined.  Similarly, middle- and upper-income Hispanic women were at least twice as likely to receive high-cost loans as middle- and upper-income White women in 62 percent of the metropolitan areas studied. 

The study suggests that minorities, especially African-American women, are likely to be affected by foreclosures. NCRC and NCNW recommend that Congress strengthen the Community Reinvestment Act of 1977, to encourage more prime or market-rate lending to working families and communities.

Congress is considering passing a bill that will cap interest rates on consumer loans at 36 percent to prevent lenders from taking advantage of people who rely on these kinds of loans to meet basic needs or to cover unexpected expenses, like car repairs or vital medical procedures, many of whom are minorities and low-income people.

One of the most predatory consumer loans is the payday loan, a short-term loan with high annual interest averaging over 400 percent.  Individuals on a limited income take out payday loans and often find that they can't pay back the loan because of the high interest.   Often they fall into the debt trap of payday loans by taking out another loan because it is the only way to pay back the first loan, accruing heavy fines in the process. 

Payday loan businesses tend to be located in predominantly African-American or Latino neighborhoods. Fifty-five percent of payday loans are taken out by African Americans and Latinos, who together pay over $240 million a year in fees. 

A recent Center for Responsible Lending survey found that nearly three in four Americans support a federal cap on consumer loans at 36 percent.

Visit 400 Faces of Payday Lending, Center for Responsible Lending's website devoted to exposing the effects of payday lending on Americans, for more information.

New Mortgage Bankers Association (MBA) data released yesterday shows that foreclosure rates and delinquency rates, or the rate of people who are at least one payment behind in their mortgages but not in foreclosure, increased in the first three months of 2009, even for homeowners with prime loans. 

According to the MBA, there are more prime fixed-rate loans than other types of loans among new foreclosures for the first time since the rise in subprime lending.  Generally, only borrowers with good credit qualify for prime loans.

The delinquency rate for homeowners with prime loans increased to a little more than 6 percent.  In addition, the percentage of loans in the foreclosure process doubled in the last year.  The combined percentage of delinquent loans and loans in foreclosure was about 12 percent, the highest ever recorded by the MBA.

Despite rising delinquency and foreclosure rates, the MBA lobbied aggressively to block an amendment to a foreclosure prevention bill in Congress that would have given bankruptcy judges the ability to rework defaulted home mortgages on family homes to an affordable value. 

Without the amendment, the bill that was passed last week will not help as many homeowners as it could have.  According to estimates by the Center for Responsible Lending and the National Association of Consumer Bankruptcy Attorneys, the change to bankruptcy law could have prevented up to 1.7 million mortgages from falling into foreclosure.

The Senate passed a bill (90-5) yesterday that will help curb credit card abuses that have unfairly harmed millions of borrowers.

The Credit Card Accountability Responsibility and Disclosure Act will forbid credit card companies from unfairly raising interest rates and imposing unnecessary hidden charges and penalty fees on borrowers.  It will also limit credit card companies' ability to issue cards to consumers younger than 21, who may not be able to repay debt.

Credit card debt has tripled in the last 20 years, hitting low- and middle-income families hardest.  Many of these families use credit cards to deal with losses in income or unexpected expenses, like car or home repairs. A 2005 Center for Responsible Lending study found that 70 percent of these families also use credit cards for basic living expenses, like rent, groceries and utility bills.