nance and rehabilitation for years. So, what we have is a blighted community which in fact previously prior to the earthquake was unmaintained. So, when the earthquake hit, what it hit was in fact the homes of the low-income community. There were about 350 homes damaged in Watsonville. We service not only Watsonville, but also the outlying areas. We have in our caseload close to 500 families of this type, of which 70 percent are seeking aid.

When we talk about the vacancy rates for farm workers and the low-income people, the vacancy rate of 1 or 2 percent does not exist, because if you talk about renting a one-bedroom apartment for $650 or $750 a month, a farm worker earning less than $800 a month cannot afford that. So therefore, there is no vacancy rate for the low-income community of Watsonville, or nationwide, as we speak of vacancy rates at all.

Homeowners have been affected, and particularly homeowners who were able to purchase homes within the last few years in the area affected most by this earthquake. We have families on our rolls who have fresh mortgages of $10,000 to $100,000. We have families, in fact, who have mortgages of payments of $1,500. Now, if you go back and compound that with the second mortgage, you are billed for $60,000, $70,000 or $100,000 additional, those families will not be able to rebuild. We are not even talking about the effects that in fact SBA will have on the families because they cannot afford a second mortgage of $1,400 a month.

Affordable housing in this area goes for $185,000 for a townhouse of three bedrooms, that is considered affordable housing and is the major problem of our area. People earning under $30,000 a year cannot afford low-income housing. The first mortgage payment on such a home, if you finance $100,000, runs $1,040 a month.

Because people in our groups provide free labor, we are able to start housing some of these families. We can rebuild the start house for them with $18,000 for materials.

Our support due to clients has been essentially providing advocacy and support in helping the families through the process of FEMA, SBA, CAL-DAP and all the other organizations. Our conclusions basically are that there has to be coordination of all community-based organizations responding to this disaster.

We were without all utilities for 3 days. There was no light, there was no water, there was no gas, and there was essentially no community. There was no way to cook. There was no communication. There were no television, there were no phones for 3 days. It was like living in darkness. People did not know where to go.

The city was too involved with the fact that the businesses downtown and repairing the infrastructure, and I can understand that. But I cannot understand the lack of compassion from the agencies to the masses; that, I cannot understand. There has to be coordination of the health services, including all the community-based organizations to all of the people in the community.

Responses have to be culturally appropriate. Red Cross was totally culturally inappropriate. They did not understand the community. They did not have an understanding of the culture or what they needed and their responsibility was culturally inappropriate.

I will share one experience with you that I personally thought was devastating. Our community-based clinic which does volunteer

work stayed open 24 hours a day after the quake. I went to Red Cross because we did not have any blankets to use for our victims that we took in. Red Cross said that I could not have four blankets because every blanket had to be accounted for. Therefore, they could not allow four blankets to go out. This was the response that I got in the time of need.

I agree with everybody that there has to be accountability in bureaucracies, so that there is privacy for the victims of a disaster. But there also has to be flexibility during disasters.

In talking about affordable housing, one of the things that is going to help is that we have to have housing that does not cost a lot. The banking institutions have got to be approached so that financing for affordable housing is there. People cannot afford to pay the exorbitant costs of interest. If you purchased a home at $185,000, by the time you have purchased that home, you have paid close to a million dollars for it after a 30-year mortgage. It is not worth the payments.

There have to be alternative methods of financing affordable housing. If money is going to be made available from the Federal Government and from other sources to do so, it has to be set up so that the same money is packaged for revolving funds and there is minimal interest of 1 percent. Otherwise, what is happening is the money is paying the institutions and the interest rates they are charging. And it is not a uniform policy.

There have to be other methods of approach in conjunction with the people who were affected by the earthquake to provide what we considerable affordable housing, affordable housing for our farm workers, affordable housing for the low-income community; it is not $185,000. If you talk about housing costs over $100,000, they are not affordable.

Thank you.

Chairman TORRES. Thank you. Thank you, all of you, for your very important statements. I am going to yield immediately to my colleague, Ms. Pelosi, for some leadoff questions and a statement. Nancy.

Ms. PELOSI. Thank you very much, Mr. Chairman. I want to thank Ms. Sanchez, Ms. Estrada, Ms. Guzman and Ms. Corralejo for their very fine testimony and very useful testimony. You were the victims yourselves and you demonstrated great courage to come here today and help us on this problem.

At the close of your remarks, Ms. Jean, you mentioned that one thing that FEMA could do better is the outreach before a disaster so that you would be better able to meet the needs of people. It seems to me that FEMA is taking the brunt of the criticism, some of which belongs to Red Cross, some of which belongs to SBA, some of which belongs to other agencies. But you have the title of being the manifestation of the Federal response, and you do not deserve Red Cross' complaints, but some of the others might adequately be placed at your doorstep.

Before us, we had some very good outreach going on right now. We cannot help meet people's needs unless we understand how they want them met. And I think that that is the major criticism of FEMA. You did say that in your remarks and I commend you for that. But I would hope that FEMA would use the valuable re

sources that are present here today in shaping any future disaster assistance and meeting the cultural needs of the people who are affected.

I heard some pretty incriminating testimony, Ms. Jean. I mean, we heard that people were turned away at the door, that they called any number of times and were told to call back later once they really got through. So, I think that although the intentions are good, there may be some shortfall between what the intentions were and what the plan is, and what the delivery of service was to the people in this community. I know that it was in ours in San Francisco.

I think that when you make your presentation, you make a good case for FEMA, as I said, how much you did do. But there are tremendous cultural gaps and there are gaps which do not recognize the strength of our community, which is our diversity.

Can you respond to some of the complaints that you did hear? Especially about when all that uncertainty descended upon people, when they lost their homes and had uncertainty about where to go next, and they went to FEMA-they knew to go there-and they were rejected in this area. That was Ms. Sanchez's question.

Ms. JEAN. It is not possible for me to specifically respond to Ms. Sanchez's experience because I was not there, I do not know what happened in that instance. I have no reason to doubt what she said and to the extent that I can apologize for whoever that was, I do. Apologies do not help people so far after the fact. All I can say is that we tried to work with our disaster relief people that we pulled off the streets to help us. We had to hire up to 1000 people in this disaster. Sometimes we discover people are not effective and we get rid of them.

We are increasing our capacity to train people. We are trying to really pick up our bilingual staff so that we can be more sensitive to do more intercultural training so that if people cannot always get people from the same culture and same background, that at least people will be somewhat sensitive in their roles, so that when you do walk into a center that the people who are suffering the most are handled the most carefully. We will try to improve that. We have also, in our defense, hundreds of thank you letters lining the walls, telling of the great help that some people did. It is an individual thing. You have my personal guarantee that in future disasters in this region, that there will be very serious ef forts to sensitize all of our application workers.

MS. PELOSI. I appreciate that. And I know that there have been hundreds of people who were served by FEMA. But we seem to have a situation here that is real, that we can document, that we have the personal testimony of our witnesses, too, and I believe them. And I also believe the witnesses who came before, that the difficulties that they had may not show up in your statistics but they do exist out there.

Why we are here is that we serve on the Housing Subcommittee of the Banking Committee, Ms. Jean. And on the Housing Subcommittee, our fight, of course, is for more affordable housing. And in light of this earthquake, the tremendous lack that we have in affordable housing become even more glaring.

You talked about compassion, people working with compassion with people who have needs. Compassion is very important and we make that case very strongly to FEMA. But alone, it is no substitute for a positive program of action which quickly addresses people's needs, whatever they are. And if we can get the program, we certainly want it administered with compassion and sensitivity to the people who are affected by it. So in your remarks, Ms. Jean, when you talked about needing more resources, certainly those of us who have seen the tremendous needs that people have after this disaster know that you need more resources. But it cannot possibly be more resources to do the same thing. It has to be more resources to meet the people's needs, as they define their needs, not as we in Washington, DC define their needs.

So, I am going to be looking very closely, and I know that our committee will. And so, I am very grateful to our Chairman for holding this hearing to see just what outreach FEMA does do in the future.

In the meantime, we have some very specific examples of how we can be helpful to these witnesses and to others for whom they speak. And I hope that we can hook up and try to make their plight a little better, even though it will never be what it was before the earthquake. Maybe from working together, some things can be better for them.

Again, I want to thank you for taking your time to come here. I know that you are busy and have a lot of demands and concerns. I promise you that your time will not be wasted. We have heard you have said; you have confirmed what we have been thinking. You give us reason and inspiration to fight harder.

And again, I thank you, Mr. Chairman, for making this possible. Chairman TORRES. Thank you, Ms. Pelosi. Let me just pursue this. I do not want to belabor this particular issue, but before coming here the committee staff prepared ample documentation appearing in the local media about the problems of this earthquake. But in specific terms, really, the kinds of issues that we are talking about here today-the insensitivity of the agencies; the runaround, so to speak-you have tried, Ms. Jean, to indicate to us that the agency, while it had many pressures, did in fact try to do an adequate job. Then, on the other hand, we hear from actual victims and they tell us that they were pushed out, that they were told to come back or call a number and do this or that.

I want to ask Ms. Sanchez, specifically, when you went to FEMA, did you fill out a form?

MS. SANCHEZ. Yes. Somebody filled it out for me. Somebody helped me with it.

Chairman TORRES. Ms. Jean was correct, then. Somebody was there with you, filling out a form?

Ms. SANCHEZ. Yes.

Chairman TORRES. And you understood the questions that they were asking?

Ms. SANCHEZ. Yes, I did.

Chairman TORRES. Did you fill out a form, Ms. Guzman?

Ms. GUZMAN. They had no applications when I went. So, I do not know what it was like. It was different.

Chairman TORRES. I see; it was different?

Ms. GUZMAN. Yes.

Chairman TORRES. And did you fill out a form?

Ms. ESTRADA. Yes, I did.

Chairman TORRES. And was there somebody to help you there? Ms. ESTRADA. Yes, there was somebody to help me to get it out also. There were bilingual people there.

Chairman TORRES. There were bilingual people. I see.

Ms. ESTRADA. You had to wait, though; for 3 hours, you had to wait. There were a lot of people out there. We are willing to put everybody in the trailers. We are willing to help. We want to get involved.

Chairman TORRES. That is very important, and you should, now that you have learned that it takes everybody to make things work. We would welcome your support.

Unless there are any further questions, Ms. Pelosi, I am going to excuse the panel. I want to echo what Ms. Pelosi has said about your presence here today. It is commendable that you have taken time to be with us. You are actually the victims; you are the people we have been talking about.

There are indications that this is not over, that these kinds of disasters will happen again and again. People have made comments that maybe that this is FEMA's last role; it will not be. Seismologists yesterday in San Francisco told our staff that there is still the big one to come at some point. And they say it may be between now and 30 years away; that is the gap. We have to begin today-today, after your testimony-to prepare for the future. So, that is why your presence here is so important, and we want to thank you very much.

Ms. SANCHEZ. You are welcome. Thank you for having us.

Chairman TORRES. I understand that joining us at this time is Mr. Richard Mallory, the State director of the Farmers Home Administration. Is that correct, Mr. Mallory? Please join us. Is Mr. Belloni here? Yes, sir.

Mr. MALLORY. I am Richard Mallory.

Chairman TORRES. I am sorry, Mr. Mallory. We were moving somewhat expeditiously this morning, and we were moving along at such a fast track that we sort of lumped everybody together. And you, as I understand, were advised that you should be here about 1:00 or so, and so, we went on without you. We still have Mr. Belloni. Neither of you gentlemen are he?

VOICES. NO.

Chairman TORRES. And he is not in the audience? So, there is just you, Mr. Mallory, representing Farmers Home Administration. Would you please introduce yourself and your two colleagues with you?

STATEMENT OF RICHARD MALLORY, STATE DIRECTOR,
FARMERS HOME ADMINISTRATION

Mr. MALLORY. Right. I am Richard Mallory, I am the State director of Farmers Home Administration in the California-Nevada area. To my right is Gus Cairo; Gus is our county supervisor. He was specifically contacted about the testimony by the committee staff, which I believe is a good testament to his good work in the