BAY AREA QUAKE : Banks, Thrifts Offer Emergency Loans, Relax Rules for Victims

Major California banks and thrifts on Friday moved to provide emergency loans and to ease the financial pressure on earthquake victims by giving them breaks on mortgage and other loan payments.

Policies vary at each financial institution, although in general they include such things as allowing victims to skip mortgage and credit-card payments temporarily, make lower payments or allow borrowers more time to pay off their mortgages.

Two major buyers of mortgages from lenders also said they will provide similar breaks for homeowners.

The Federal Home Loan Mortgage Corp.--called Freddie Mac--said it is devising a mortgage-relief plan and that it will suspend until Jan. 1 foreclosure procedures on property in the earthquake area. The Federal National Mortgage Assn.--Fannie Mae--said it plans to offer a similar program. Both agencies advised homeowners to check first with the companies that service their mortgages.

Meanwhile, private lenders began organizing programs to provide homeowners and businesses money for repairs.

A consortium of 46 banks in the state that normally provides money for low-income housing may also pool money to make disaster-relief loans, said Hugh D. Loftus, first vice president of Security Pacific National Bank. He said members of the Burbank-based group, called the California Community Reinvestment Co., plan to meet next week to work on plans.

Some of the state’s major financial institutions announced their own loan programs for victims or said they will do so next seek.

Bank of America, the state’s largest bank, said it is offering emergency, low-interest, 90-day loans without fees to homeowners who suffered damage. They will carry an interest rate equal to what the bank is paying for money, which now is 8%. Unsecured disaster-relief loans for up to 48 months are being offered at 12%.

Wells Fargo Bank, also in San Francisco, is expected to announce a program Monday to provide loans at 9% to renters and homeowners whose residences were damaged by the earthquake. The Wells Fargo loans will be offered only to the bank’s current customers.

Wells Fargo also is setting up a $75-million pool of money for low-interest loans for small business customers with sales from $250,000 to $5 million a year. Those loans will have an interest rate 1.5% below the prime rate, now at 10.5%.

Union Bank, another San Francisco bank, said it will provide unsecured disaster-relief loans of up to $25,000 to quake victims. The 90-day loans carry an interest rate equal to the rate Union is paying for money, now at 8% to 9%.

Union Bank also will provide loans to people whose cars were damaged in the quake, with no payment for 90 days, and will waive penalties on early withdrawals of money in certificates of deposit.

Homeowners also may seek low-interest loans through the U.S. Small Business Administration, the federal agency that administers disaster-relief loans. The agency makes available up to $100,000 to repair damage to homes and up to $20,000 for personal property damage, which includes cars and furniture.

Homeowners pay either 4% or 8% interest, depending on whether they have credit elsewhere, and may take as long as 30 years to pay off the loans, depending on their ability to repay the money. Bernard Kulik, an SBA deputy assistant administrator, said loans may not be used to upgrade a home, unless it means bringing the house up to code.

For businesses, Kulik said, the SBA has two basic loans available.

The first is a “physical disaster loan” of up to $500,000 for repairs or to replace such things as damaged inventory. The interest rate is either 4% or 8%, depending on the financial health of the business, and businesses may take as long as 30 years to repay the loans. Large businesses may be eligible for more than $500,000.

The second type of loan is an “economic injury loan” that provides a cash infusion to a business so it can continue to pay its bills while recovering.

The rate is 4% for up to 30 years and applies to small businesses--with fewer than 500 employees--that do not have credit elsewhere. A business may borrow a combined total of $500,000 under the physical-disaster and economic-injury loan programs.

The toll-free number for information on the SBA loans is 1-800-462-9029.

If loans to individuals are insufficient to cover needs, they may be eligible for grants of up to $10,000 through the Federal Emergency Management Agency.

That money may be used for a wide variety of needs, including medicine, health care costs or funeral expenses. In addition, the agency makes rent money available to those who cannot live in their homes because they are unsafe.

Information on the FEMA programs also may be obtained by calling 1-800-462-9029.