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Rising from Ruin is an on-going MSNBC.com special report chronicling two coastal Mississippi towns, Bay St. Louis and Waveland, as they rebuild after Hurricane Katrina.

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BAY ST. LOUIS, Miss. -- Six months after back-to-back-to-back hurricanes lashed the Mississippi Gulf Coast and southern Florida, the Small Business Administration says it has been processing and approving low-cost disaster loans at a record pace for tens of thousands of hurricane victims.

But those figures carry little weight with critics who say that even a record pace isn’t fast enough given the scope of the natural disaster, or with victims left wondering why their application has been denied or, worse, if it has gotten lost in some bureaucrat's computer.

The SBA has the numbers to back up its claims. As of Feb. 21, its records show it has approved a total of 17,136 home loans worth a total of $1.2 billion in Mississippi and 30,188 home loans worth $2 billion in Louisiana. Across all the areas hit by the hurricane trifecta of Katrina, Rita and Wilma, the SBA has approved $4.12 billion in loans to more than 58,000 residents who qualified for loans of up to $200,000 at below-market interest rates to repair or rebuild their homes or up to $40,000 to replace renters' lost possessions.

In hard-hit Hancock County, Miss., alone, the SBA has approved 2, 416 home loans totaling more than $245 million.

"The SBA has been approving disaster loans at an unprecedented pace," says SBA Administrator Hector Barreto. "Never before in our history has the SBA been asked to respond to a disaster of this magnitude, and our people have worked tirelessly, compassionately and with urgency to meet the needs of the people affected by these hurricanes. Our results beat by more than six months the time it took SBA to reach $4 billion after (California's) Northridge Earthquake, which was the only other disaster to surpass the $2 billion mark in our 52-year history."

But it's also possible to look at the glass as half empty. Six months after Katrina, the SBA still hasn't processed 31 percent of the home loan applications it has received in Mississippi and 41 percent from Louisiana residents. And of those applications it has processed, 41 percent were rejected in Mississippi and 39 percent in Louisiana.

Criticism over qualifying criteria

The SBA has no explanation for the high numbers of rejected loans other than to say that the applicants didn’t have adequate income or good credit ratings.

"We’re a little bit more lenient (than banks) when it comes to qualifying standards," says Matthew Young, an SBA spokesman in Mississippi. "However, we still have to be accountable and prudent in making the loans because it’s taxpayer money."

That statement highlights the Catch-22 nature of the disaster loan process: Many Katrina victims are out of work and forced to lean more heavily on credit cards than ever before, a combination that few lenders are likely to consider a good credit risk. And despite their desperate financial circumstances and the fact that many Gulf Coast residents had comparatively low incomes before the storm, the SBA hasn't taken any steps to adjust its qualifying criteria.

The agency's response also has left some hurricane victims with clean credit but little cash feeling bitter and frustrated.

Patrick Kimbrell of Bay St. Louis said he applied for an SBA loan after FEMA rejected his request for disaster assistance because he hadn't yet applied for a loan. Then the SBA turned down his application because the agency deemed him not creditworthy, he says.

"My wife and I bought a house just five months before Katrina hit," Kimbrell says. "The bank saw nothing wrong with my credit and loaned me the money.

"I don't know what the heck is wrong with the SBA. I've never missed a payment in life; paid off several loans, including some car loans, and didn't carry any balance on my credit card."

Kimbrell says he is making repairs on his home using a small insurance settlement. "It won't be enough to repair (the house) all the way," he says. "But at least we got a roof put on it."

The SBA does have an appeal process for those that have been denied a loan, and Kimbrell said he might challenge the ruling if he can find the time between making repairs to his home, making a living and getting his family's life back on track.

Process, process, process

Getting an SBA loan can be a daunting process, especially if all your financial records were wiped out along with your home. SBA applicants must submit loan applications and provide income statements, tax returns and other income-verifying data. Loan officers then assess an applicant's capability to repay the loan based on its internal criteria. SBA "loan verifiers" also physically inspect the damaged properties. The agency also requires that applicants put up some kind of collateral, which in disaster situations usually means the real estate they are rebuilding.

Although the agency averaged more than $36 million in loan approvals a day during December, some applicants say they have been waiting for months to hear whether their applications have been approved.

"We've had an SBA application in since before Thanksgiving and haven't heard a single word," says Yancey Pogue, a Bay St. Louis real estate agent. "Now, to be fair, I also haven't been pestering them on the phone every day like you have to do with every other government agency these days, so maybe it's time I get started on that mission. But don't you think that ... waiting for that long just to hear back is, well, wrong?"

Pogue isn't the only one criticizing the SBA for the pace at which it is processing applications. Lawmakers have ripped SBA officials at congressional hearings, accusing officials of dragging their feet at a time when people need critical help.

SBA's Barreto acknowledges that in the early days after the hurricanes his agency suffered through computer snafus, had problems gaining access to the stricken areas and that its 880-person disaster assistance section was overwhelmed. But he says the first two problems have been solved and the agency has grown its disaster-assistance team to more than 4,000 since then.

"More than two-thirds of SBA's 6,346 employees are working seven days a week to handle the demand for loans," he says. "We are committed to doing whatever it takes to make sure every person who needs and qualifies for help, gets it quickly."

SBA chief has his defenders

And although some in Congress called for Barreto to resign, he has his supporters on Capitol Hill as well. Hurricanes Katrina, Rita and Wilma were a "triple whammy (that) caused unprecedented challenges for government officials trying to provide assistance to the hurricane victims," House Small Business Committee Chairman Don Manzullo, R-Ill., said at a December press conference. "Quite frankly, the SBA is in a no-win situation with this disaster. It is understandable that those affected by the disaster want to get their loans as soon as possible. At the same time, taxpayers demand accountability and a reasonable expectation that the loans will be paid back. That takes time to determine whether applicants can pay back the loans."

Manzullo noted that owners of businesses that received SBA loans to rebuild after the 9/11 terrorist attacks also complained about the slow processing times. "Earlier this year we learned that twice as many of the 9/11 loan recipients defaulted on their loans than any previous disaster, saddling taxpayers with the added costs of repaying the loans," he said. "And still, the SBA was criticized for not responding fast enough."

Such statistics hardly register with someone like Kimbrell, who is juggling two jobs and scrambling every day to make ends meet. "I'll tell you about disaster," he says. "The SBA is a disaster, that's what that is."

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Since there is such a lack of order with the government, it's no wonder the response was non-existent to those in need. We tend to take a wait and see approach instead of being proactive to reduce the devastation. Incompetent officals were the cause and now it will cost much more to rebuild.

This is getting tedious, many if not most of the people screaming about long waits are the same people who scream that their taxes are wasted on "lazy government employees". I have been in politics for a long time and that is one of the major complaints of both party's constintuencies. "Too many people being paid too much to do too little work". Government agencies are staffed for the routine peaks and valleys of their workload. Last summer's hurricanes are a far greater than the usual peak work load and will overload the routine staffimg and the work is not something you can bring in a few temps to handle. Neither do you want to give out money willy-nilly in light of the absolutely aggregious fraud which has already come to light. This was a storm of a century and it will not be handled routinely. Computer problems happen; travel into the disaster area was disrupted for everyone; and the normal amount of phone lines will be overwhelmed in a disaster of this magnitude. Maybe we should hire 2 times the staff and/or infrastructure only to let them/it sit around waiting for the next big storm which may not come for years? Of course, the electorate would then scream about lazy government workers sitting around soaking up their tax dollars or spending money on things not being used.

SBA isn't the only Federal Program that is assisting Katrina victims. I work for USDA Rural Development and was detailed to the Hattiesburg, MS recovery Center last October. USDA Rural Development worked alongside our fellow Federal employees at SBA, FEMA, etc to assist victims with repairs to their home or to purchase a different home. Rural Development also assisted folks in obtaining an apartment through our multi-family housing programs. I came back to my home state of Indiana in early November, therefore I am unaware of how many folks Rural Development helped down there, but I believe it would warrant the writer of this story to look in it. Our agency sent 30 employees from 10 different states to assist our fellow Mississippi RD employees to man all the Recovery Centers. I don't have a handle on how many preapplications were taken in MS, but gauging from what I saw in Hattiesburg it had to be in the thousands.

What can u do. We (the consumers or victims) in this case know nothing. We have good ol FEMA & other folks that are supposed to help us. So what can u do when they say you're not worthy?

So what is the big deal?

According to the State and Federal Government, our economy is strong and the job outlook is even better. Recent news reports also show that employers in the area, like McDonalds and Burger King, are paying the highest wages ever, so why do the people need loans?

Our dear leaders in Washington have assured us that New Orleans will be rebuilt. So why should we be concerned with a few applications that were turned down by FEMA and the SBA?

Why is that before a disaster everyone wants smaller government,lower taxes and the government "off their backs". Now that it is after the disaster, everyone is there with their hands out and complaining that the government isn't moving fast enough, isn't giving out enough money and isn't there when they need it. You get what you ask for and what you pay for.

Here's a sad story,

My wifes now 90 yr old aunt lost her only husband in 1990, then lost their home and all her memories and possessions in 2005 in Katrina. Her home was near the London Canal breach. She's stayed with us as of 12 midnight the Saturday before the hurricane, when we rushed to New Orleans after convincing her to leave. She told us "I've never flooded before", and "But I can swim", but finally gave in when her closest neighbors told her they were leaving.
Fortunately, she is blessed with good health, and a sharp mind. She's very intelligent, speaks several languages, and is very much into politics. She reads the paper daily, as well as Time Magazine, Newsweek, etc. Her only son lives in California, and has tirelessly handled all the contact/paperwork regarding FEMA, SBA, Utility Co., Mortgage Co, etc. She doesn't like going to Calif (except to visit), and really loves my wife, so she has stayed with us.

I realize that younger couples, and those with young children, are struggling with making a living, helping their kids get back to some normalcy, basically rebuilding their families lives from scratch, and still having to deal with these same issues. But it's a shame that Aunt D. is still waiting. She dreams of one day being back in her home of 40+ years, yet knows it'll probably never happen (waterline up to roof). She dreams of maybe moving in with her 87 yr. old sister and her family in Vera Cruz, but a 2 day visit recently made her realize that probably won't happen, as her sister has many health problems and they could not take care of each other.
She dreams of maybe buying herself a house near us in Baton Rouge, but wonders if it'll ever happen. The SBA loan application has been agonizingly slow, and seems to be far away from resolution.
Others, though their plight may seem more difficult with kids and jobs and cars and housing all being important and urgent needs, have many years to finally get themselves back on track. Aunt D. doesn't have the luxury of time. It's not on her side. She may have one, or ten years left. I see her agony every day, as well as her joy - of living, of having friends and family, of animals (she loves our Yellow Lab, and he her), of sunrise every morning, and of the stars at night. But time is ticking, and she needs her own place once again, where she can make coffee on her own stove, plant her own fruit trees, sweep her own porch, and sleep in her own bed. And she needs it more than any of the other Katrina victims because, in my opinion, she has so much less time to enjoy it.

I cannot believer that the SBA does not make HUGE exceptions, especially with the Katrina victims! They were nearly wiped out, they are trying to stay in the same area, rebuild their community, and continue on. I still know families that are having difficulty filing for their relief. It is a shame in our great country that a person still has to beg.

What should be done is very simple. all those affected should organize and simple go to Washington DC and just set up camp by the White House, The Capitol and all the public parks and monuments.
I promise, our government would then act. Could you imagine world leaders visiting our capitol and seeing this.

Why are people rebuilding in N.O.? Home Insurance rates there will be so high (rightfully so) that a significant majority of people moving back there won't have home owners insurance. Hence, next time there is a big storm (eventually there will be) all of these re-built homes will be wiped out and everyone will expect the govn't to pick up the tab, which is BS. Whomever is moving back to N.O. is ignorant. Yes, it may be tough to relocate and forego your previous residency, but it's the rational decision. I'm sick of people making dumb decisions and not taking responsibility.

all i have ever known of government....is too many chief's...too few little indian's....sad but TRUE

Are you implying that people only should live where there is no possibility for disaster? Do you mean to tell me you're so naive to think a disaster cannot occur in other parts of the country? Earthquakes in West, hurricanes in the SE, tornados in the MidWest. Shall we all move to a fabricated bubble in fantasy land that will never get a natural disaster? No, you plan ahead with strict building guidlines and provide everyone with education and knowledge. South Florida rebuilt after Andrew...New Orleans will to. It will take time, but for you to call it a dumb decision is well, dumb...

I don't feel one bit sorry for the people who did not have insurance and who KNEW this hurricane was coming and the possible damamge it could cause. Hurricanes just don't happen overnight and there are people who work for the state and city who can assist with evacuations. It is because most of these people are already being taken care of the government and don't have to do for themselves, so why should they start now? Until the end of time, most of the New Orleans residents who are yelling and screaming for the government to do something for them are to lazy, selfish and stupid to get off their hides and do something for themselves. Like getting a job and paying their way. Why should the rest of the country have to pick up the cost to rebuild a city whose people won't take care of it and will sink into the sea anyway? In all those news clips when you saw people sitting around or stealing because they can't get out of the city, well, you got two legs, WALK! I will not support or send any kind of aid to these people because of all the stealing and whining. The only thing I will continue to support is the animal rescue for all the pets that were left behind.

If I rember correctly, the SBA has been downsizing over the past three years. They are expected to do more with less. Let us not forget that !!!!

It is not surprising to me that this "Administration of the Rosey Scenario" would make another promise it can't keep...to rebuild New Orleans, bigger and better than it was before the Storm. As hard as it might be to desert one's lifelong home, in the real world one must find a way to restart one's life as quickly as possible.

As I am now witnessing from the recovery from the fires that ravaged San Diego 2 years ago, those who decided to rebuild their dream homes are still fighting with insurance companies and contractors and living out of suitcases. Those who took their settlement and decided to immediately relocate to available, existing properties elsewhere are two years into their new lives and focused on new sources of happiness.

The Government should have allowed for the option of immediate buyout of lost properties to allow for those who were willing to get a fresh start, sooner rather than later. The Government did many a great disservice with lofty (but empty) rhetoric about the swift rebuilding of the ravaged gulf coast. Another misguided "rosey scenario" trumping the much needed "real solutions"

Right on M Anderson from Madison, WI! Governments should exist to ensure justice and equal opportunity, not take care of people like children and try to create equal outcomes.

what should be done is the citizens of new orleans should clean there city up themselves,why does the goverment have to help?seems evry time the goverment get involved things go to hell anyway.

Let me point out to the negative attitudes out there that think we are all looking for a hand out - WE ARE NOT!
There are many people that were affected by the hurricane that had both homeowners and flood insurance and each insurance company is saying the other should pay. These people have no home, no insurance, nothing and a mortage they continue to pay that is now for a lot with a slab.
This could happen to any one, any where. Watch CNN, watch the Fox News when they both have reports on what is going on in this area.
Lots of us here a people who are use to fixing things, we cannot fix this. We did not expect this and yes, half of the US really do not even want us to relocate to their towns.
You need insight, you need to visit here.
Obviously there are many who post on here that are such mean spirited people from the start!

What about some self sufficiency and picking one up themselves? There is NO WHERE in the constitution that says these people have a right to any of this. If they choose not to get a job and move forward why should I help them because I have?

I was thinking, there where around 200,000 homes destoryed, let say for a moment that every home owner recieve 200k to rebuild, that would equal what 40 Billion Dollars, and lets say another 25 Billion for Infustructure. So where still below the cost of the nation building taking place in Iraq, one of the worlds largest oil reserves and im still paying around $2.5/ gallon. (don't replay that europe is paying over 5 dollars a gallon, much of that has to do with the taxes in place.)

I'm sick and tired of hearing how the government hasn't helped the victims of Katrina. What makes this the governments responsibility anyway? I for sure don't agree with rebuilding NO at the governments expense. Let's get real people, start taking responsibility for yourselves.

My heart goes out for all the people who lost their homes in Mississippi and New Orleans but what can the Federal govt. due with a loss of this magnitude.No one has said anything about the insurance companies insuring all these homes.Why should they be allowed to walk off and not pay up as they are supposed to.I agree the homes in N.O. that are below sea level should not be allowed to be rebuilt w/tax payers money.


The recovery seems to be going alone slow and steady. Despite the problems in New Orleans the slow move for former residents back into the city might speed up the building process. The states and its residents definitely need some stability. Those in Florida go through the same affect year after year on a smaller scale. We should take notes from their recovery efforts.

This is the just the tip of the iceburg.If you think for a second that Katrina was a major disaster, your crazy. The major disaster is the way its being delt with. Insurances companies pay out on a daily basis for fires thefts etc. But the minute you have to pay out major amounts that dwindle funds or large gross profits you have to apply stall tactics. This is not something new. the government does the same thing. Billions spent on war, no end to the cash, natural disaster! hey get in line! The really sad thing is how in three years from now there will just be a couple of scape goats and then its back to business as usual, until the next disaster.The trickle down theory never works. Its time for accountability.

Wise, I hope that yours is the last of the really tiresome posts saying that NO should not be reinhabited. I suppose that's an option if you want to pay about 30% more for anything that is not bigger than a breadbox, plus oil, but I don't think that's what you want.

NO is there for a reason. It is at the mouth of the Mississippi and the starting point for tons of goods shipped on the Mississippi River, which includes oil. There are oil platforms in the Gulf that need the city as their base. The city was there for a reason, and it was never the largest of cities BEFORE the hurricane. And if you have workers who have to be there, they need hospitals, schools, shops, etc.

Should the new structures be more hurricane-proof? You betcha. Should the levees be made more secure? Of course. Should some areas of the city NOT be resettled? Maybe.

There are thousands of residents who HAVE decided NOT to move back, who have decided that they can do what they do somewhere else, and I'm sure that it was a tough decision for them, and I ache for their feeling of dislocation.

To the others who want to reclaim their sense of place, their heritage and HOME, good luck to you all.

And by the way, here's a quiz for you. Where can you live in the U.S. that DOESN'T or might not have a major disaster or economy breaker every 100 years or so?

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