Hurricane Katrina

Mississippi sues landlords over Katrina loans gone bad

This house in D'Iberville is one of six previously owned by Dwayne T. Mallett of Biloxi, according to a lawsuit the state filed against him. The lawsuit seeks to recover $326,500 in loans Mallett received after Hurricane Katrina to help fix up properties for rent. The lawsuit alleges that banks foreclosed on three of the properties and Mallett sold three others.
This house in D'Iberville is one of six previously owned by Dwayne T. Mallett of Biloxi, according to a lawsuit the state filed against him. The lawsuit seeks to recover $326,500 in loans Mallett received after Hurricane Katrina to help fix up properties for rent. The lawsuit alleges that banks foreclosed on three of the properties and Mallett sold three others. calee@sunherald.com

The state is going after landlords and would-be landlords who promised to fix up property after Hurricane Katrina for low- to moderate-income tenants but failed to abide by the terms of their forgivable loan agreements.

The Mississippi Development Authority has filed 65 lawsuits and so far recovered $630,000 in funds the U.S. Department of Housing and Urban Development provided the state after the devastating 2005 hurricane. Loans were available to qualified applicants in Harrison, Jackson, Hancock and Pearl River counties.

MDA recently filed a lawsuit in Harrison County Circuit Court against Dwayne T. Mallett, whose address was listed in Biloxi. Mallett could not be reached to comment on the lawsuit.

MDA is trying to recover from Mallett $326,500 in loans, almost $33,000 in fees and interest. MDA loaned Mallett the money after he applied in 2009 for assistance with six rental properties. The lawsuit says banks foreclosed on three of the properties, while Mallett allegedly violated the terms of his loan agreements by selling three others.

The MDA loans were designed to assist with the cost of construction. Mallett received the loans for houses in Ocean Springs, D’Iberville, Gautier and Pascagoula, according to the lawsuit.

MDA said amounts loaned under the rental program ranged from $20,000 to $70,000 per property.

Spokesman Jeff Rent said 3,509 rental houses were completed under the program, which HUD cites as a disaster-recovery model for other communities.

“One of the things we’re proudest of is that we were able to assist some of the most heavily damaged communities in not just revitalizing but preserving neighborhoods and giving people an affordable place to live again,” Rent said.

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