WEST LIBERTY — Banks typically don't give money away, but one lender is doing just that to help Kentucky tornado victims.
The Federal Home Loan Bank of Cincinnati has a program in which homeowners and renters who were displaced or who suffered damage to their primary homes might be eligible for grants of as much as $20,000 toward the purchase, construction or repair of a home.
Because these are grants, the money doesn't have to be repaid.
That sounded like a good deal to West Liberty police officer Tim Smedley, 46, whose house was among the 299 homes destroyed in the Feb. 29 and March 2 tornadoes that hit Morgan County.
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Smedley recently learned that he qualified to receive a $15,000 grant, which will be taken off the top of the $75,000 purchase price for a three-bedroom, one-bath house in West Liberty.
Smedley said the house is in a safe, quiet neighborhood — as a police officer, he said, he has never been called to the area — and should be a good place for him and his fiancée, Heather Russell, to raise her 6-year-old daughter, Kaylee.
"There are obviously kids everywhere, because I see playhouses and kids' toys in every yard," Smedley said of the neighboring properties. "We needed a house anyway, and I was wanting to buy."
The FHLBank of Cincinnati set aside $5 million for its disaster-reconstruction program, which is available to qualified applicants in any county declared a disaster area in Kentucky, Ohio and Tennessee. Participating banks began taking applications for the program on May 1, and grants are now beginning to flow in to stricken communities.
"You can use it to repair your home, acquire a new one on your own property or somewhere else," said FHLBank spokesman John Bycz kowski. "The money is intended to fill the gap of what you don't get from insurance and other sources."
The FHLBank is one of 12 around the country. It is owned by 741 member institutions in Kentucky; it does not receive taxpayer dollars.
"We were created by Congress back during the Depression to get the housing market moving," Byczkowski said.
"When the tornadoes came through, we had a bunch of our bank members say, 'We really need help. These communities are devastated.' "
So the Cincinnati bank set aside a $5 million fund to aid disaster recovery. That is $5 million in addition to the $30 million normally that the FHLBank sets aside for affordable housing.
"They came up with this program specifically for this disaster," said Howard Elam, vice president of Commercial Bank in West Liberty, where Smedley is financing the balance of the home purchase. "It's a beautiful program for the people who can qualify and get the money."
The Cincinnati bank has a history of similar programs. When Hurricane Katrina flooded New Orleans, the bank set aside money to help residents relocate.
"We couldn't put money into Louisiana because that's outside of our district. But we heard of a busload of people showing up in Ironton, Ohio, and they got our money to resettle in Ironton," Byczkowski said.
The bank also set aside money during the foreclosure crisis to help people stay in their homes.
The disaster recovery program was announced more than a month ago in Moscow, Ohio, a river town where most of the 110 buildings were damaged or destroyed.
Smedley, one of two West Liberty police officers who lost their homes in the storm, learned of the program while shopping for home mortgages.
The house he's buying is owned by Bank of the Mountains, another Morgan County institution. Darren Gillespie, a loan officer at Commercial Bank in West Liberty, told him about the program, and Frontier Housing, another mortgage lender that concentrates on affordable housing, provided details.
Smedley said he hopes to occupy the house about June 1. He must live in the house for five years as a requirement of the program, but Smedley said that's no problem, because he likes West Liberty and wants to stay.
The grant program and other low-interest loan programs are playing a crucial role in the recovery of West Liberty, where the knocking of hammers resounds throughout the town of 3,400.
The only previous experience Smedley could compare to West Liberty's devastation was his time in the war-torn West African nation of Liberia, where he trained police officers for the United Nations in 2004.
"They had no government infrastructure," he said. "What we did there is really similar to what we're doing here." He said the West Liberty Police Department is operating out of a trailer until City Hall is repaired and ready for occupation later this year.
Smedley said he looks forward to occupying his house.
Peeking through the windows into the dining room, he said, "It's going to need a little bit of work, but it's not bad."