Housing and Urban Development Secretary Alphonso Jackson on Thursday announced that Ginnie Mae, a government-owned corporation located within HUD, will extend its Targeted Lending Initiative (TLI) to the areas hardest hit by Hurricane Katrina. The TLI is a program that encourages lenders to finance housing in underserved areas.
Under the TLI, Ginnie Mae will reduce its guarantee fee by as much as 50 percent when approved issuers originate or purchase mortgage loans in the hardest hit hurricane disaster areas. Reducing the guaranty fee lowers the lender’s expenses and provides an incentive to make more loans. Ultimately, this disaster relief aims to make more money available for affordable housing in the areas devastated by Hurricane Katrina, HUD said.
“Using the TLI program to stimulate financing for affordable housing in the devastated areas will provide lasting relief for hurricane victims,” Jackson said.
The TLI program is already used to encourage mortgage lending in many underserved communities. Currently, more than 10,000 census tracts are identified as targeted areas within the TLI program. Additional TLI areas include areas selected by HUD as Urban and Rural Empowerment Zones, Urban and Rural Enterprise Communities, Urban and Renewal Communities, areas defined by HUD as underserved, and census tracts with Native American population greater than 50 percent.
Regarding specific hurricane disaster locations, the TLI will be extended to all areas FEMA declares eligible for individual assistance, and this assistance will be available to Hurricane Katrina victims for the next 48 months.
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