Several federal agencies recently extended or clarified relief efforts for Gulf Coast residents suffering the devastating effects of storms that battered the region this year.

On December 1st, both Freddie Mac extended foreclosure suspensions on homes and the Federal Emergency Management Agency (FEMA) continued paying the hotel bills of nearly 50,000 hurricane area evacuees.

Also, the U.S. Treasury Department and the Internal Revenue Service clarified quickly passed legislation that, among other things, reduces costs associated with early withdrawal from the retirement savings of those affected by the storms.

Freddie Mac is extending through Feb. 28, 2006 its foreclosure suspension on Freddie Mac-owned mortgages in Hurricane Katrina and Rita disaster areas and continuing other related relief policies that previously expired Dec. 1.

The suspension applies only to FEMA-qualified individuals in need of assistance. Freddie Mac is also waiving its usual documentation requirements -- proving dire need -- and giving servicers the authority to extend forbearance to all of the borrowers in especially distressed areas, as well as to individual borrowers on a case-by- case basis.

Freddie Mac is also telling servicers not to report hurricane-related delinquencies to credit agencies through Feb. 28 and leaning on them to forgo collecting penalties or late fees as mortgages are reinstated.

"Today's announcement extends our mortgage relief polices to the borrowers who may need more time to recover their incomes or homes while helping our servicers resume normal business operations," said Freddie Mac Chairman and CEO Richard F. Syron.

"Our goal is to move the relief and recovery processes forward in a fair and financially responsible way for borrowers, mortgage servicers, and investors in Freddie Mac mortgage securities," he added.

Even if a servicer determines foreclosure is the only option, the servicer must request Freddie Mac's written approval to initiate foreclosure or resume foreclosure action interrupted by the mandatory forbearance period

Home owners are encouraged to contact mortgage servicers as soon as possible if they've been benefiting from mandatory forbearance that expired Dec. 1.

FEMA averts own disaster

Roundly criticized for planning to end the already controversial hotel-housing relief effort at the onset of the year-end holidays, FEMA on Nov. 22, announced it would delay plans to stop footing the hotel bills for 50,000 families displaced by 2005 storms.

The federal agency was due to cut off payments Dec. 1, but announced that evacuees in 10 states -- Louisiana, Texas, Georgia, Florida, Mississippi, Alabama, California, Tennessee, Arkansas and Nevada -- now will have until Jan. 7 to find other housing. Evacuees elsewhere in the nation have only until Dec. 15.

"We recognize that some states have had a difficult time finding appropriate housing for evacuees," FEMA Director David Paulison said at a news conference.

Hurricanes drove millions of Gulf Coast residents to hotels in 49 states and Washington, D.C. in late August and a month later FEMA announced the Dec. 1 hotel-payment deadline.

The new deadline will provide some relief for those displaced but the federal housing relief policy has been slow, disjointed and insufficient to quickly meet the needs of suddenly homeless people.

Evacuees will also be available for three month's rental assistance when the new deadline hits, but with few rentals available in Louisiana, displaced residents will be hard fought to find housing in their home state.

Government and housing officials and service agencies in Houston, TX, where 150,000 Louisiana residents fled, 16,000 of them to hotel rooms, had been finding apartments for 400 to 500 people per day, but said they would not have made the original Dec. 1 deadline.

FEMA spends about $3 million a day on hotel rooms, nearly twice what it would cost to house eligible people in apartments.

The agency is also officially promoting "Disaster Housing Resources", an online portal for finding and listing homes for disaster victims. The site was established during the 2004 hurricane season.

Many free-housing offers from private property owners have gone unused without government endorsement or support.

Tax breaks

The IRS and the Treasury Department recently clarified provisions of the Katrina Emergency Tax Relief Act of 2005 (KETRA) in regards to retirement plans, including Individual Retirement Accounts (IRAs) tax relief benefits.

For individuals who live in Gulf Coast states most affected by Hurricane Katrina and who suffered an economic losses as a result of that hurricane are qualified for special Hurricane Katrina distributions from retirement accounts called "Katrina distributions."

The Feds said the special distribution is not subject to the 10 percent additional tax normally applicable to early distributions from a retirement plan (25 percent in the case of a Simple IRA) and may not be considered as income.

Another KETRA provision increases the allowable plan loan amount from an employer-sponsored retirement plan and provides for a suspension of payments for plan loans outstanding on or after August 25, 2005 that are made to Katrina victims.

KETRA also lifted the $100 and 10-percent limits on casualty losses claimed on tax returns by Hurricane Katrina victims and gives taxpayers affected by Hurricane Katrina until Feb. 28, 2006, to file certain tax returns and pay any taxes due.