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Get A Game Plan Louisiana Transparency & Accountability Report Fraud
State of Louisiana outlines new policies, help for unfinished Road Home grantees

Public Comments Accepted on Plans Beginning Today

May 15, 2013

BATON ROUGE - The State of Louisiana has developed new policies, including construction financing assistance, for Road Home grantees who have attempted but, for reasons beyond their control, have been unable to fulfill the requirements of their Road Home agreement of returning and reoccupying their home.

Option 1 recipients within the Road Home program chose to take a grant to rebuild or repair their storm-damaged home and agreed to reoccupy that home. Option 2 recipients chose to sell their damaged home back to the state then purchase and occupy another home within Louisiana. Road Home grantees have three years from the time of their closing to comply with their covenant or grant agreement. As that three-year period reaches its end, homeowners are asked to report back to the program as to whether they have fulfilled their obligation. If they have, homeowners are considered in compliance and their grant is closed; if they have not, they are required to repay their grant amount to the state.

These Action Plan Amendments address Option 1 or Option 2 recipients who have faced circumstances beyond their control, causing them to be out of compliance and to possibly owe funds back to the state.

"The first priority of the Road Home program has always been to assist homeowners in returning home," said Pat Forbes, executive director of the Louisiana Office of Community Development. "These new policies are designed to help some homeowners who have not been able to complete their repairs or reconstruction due to circumstances beyond their control. These changes will allow us to exhaust every option to bring folks home as we prepare to close out the Road Home and seek to recapture funds from those who are not in compliance."

Program policies and resources already exist to provide additional services to grantees and to allow homeowners whose circumstances have changed since their initial grant award to make a post-closing option change and sell their home to the state. 

Re-evaluation of Benefits
Action Plan Amendment 58 addresses the amount of money subject to recapture from Road Home grantees. The policy proposed in APA 58 applies to either homeowners who owe money back to the program or Option 1 or Option 2 Road Home recipients who closed on their grant but have not fulfilled the terms of their grant agreement due to unforeseen circumstances.

Circumstances recipients may have encountered include:

  • Contractor or builder fraud;
  • Involuntary forced mortgage payoff;
  • Theft or vandalism;
  • Damage from a subsequent event – such as another hurricane or a fire – prior to completion of repairs; or
  • Installation of contaminated drywall.

If a homeowner can show required documentation that such a circumstance has occurred, then the sum of money lost from that incident - e.g. contractor fraud - will be subtracted from the total amount of benefits the homeowner received at the time of his or her Road Home grant closing. The new amount becomes the "Net Award," is considered the actual amount of Road Home funds received by the homeowner and will be deducted from the total funds the homeowner owes back to the state.

Construction Financing Assistance
Action Plan Amendment 59 
provides additional assistance to qualified Option 1 grantees in the form of a Loan Principal Repayment Grant, which will be applied to the principal of a construction or rehabilitation loan. The loan will be used to complete home repairs so the homeowner can reoccupy the home, fulfill his or her Road Home covenant and become compliant within the program.

The state Office of Community Development's Disaster Recovery Unit will engage lending institutions and community development financial institutions, working closely with participating lenders to streamline the applicant referral process and implement the proposed construction loans.

Qualified participants must have an approved re-evaluation of their grant amount in accordance with APA 58. The Net Award for the homeowner, as determined through APA 58, will be subtracted from the original grant amount received, which will produce the maximum amount in LPRG assistance that could be available to a qualified applicant. Loans will only be made for the amount needed to repair and reoccupy the home.

LPRG recipients must be able to assume the debt to repair their home and qualify for a construction loan according to the underwriting standards of the lender. All properties being repaired with LPRG assistance must have the appropriate environmental clearance.

The LPRG will substantially reduce the risk to the lenders, enabling them to make larger loans to homeowners and approve those that may not otherwise qualify under normal market criteria. The assistance will also reduce the amount of the homeowner's loan payments. In some cases, the LPRG may provide sufficient funding to complete the recovery without a commercial loan. For those participants, funds will be administered through a construction monitoring process and disbursed as the work is completed.

All LPRG recipients will be included in the case management process, which will ensure that they are aware of all resources available to them, as well as their compliance responsibilities. Case management resources offered will include counseling, legal services, construction management and assistance applying for the construction loan tied to the LPRG.

Grant recipients potentially eligible for the LPRG will be identified through program correspondence, self-identification, program monitoring and compliance procedures, local code enforcement and interaction with non-profit organizations. As interested applicants are identified, they will be assigned to a case manager who will verify eligibility and assist the applicant through the loan application and qualification process.

Clarification on the Use of Elevation Funds
Action Plan Amendment 60
allows for the reclassification of Road Home Elevation award amounts that have been used for home repair and reconstruction to be considered part of the applicant's compensation award.

The cost to elevate homes has increased substantially since the Road Home program began disbursing Elevation Incentive awards, and many homeowners did not have enough funds to complete the basic repairs needed to reoccupy their homes. As a result, some grantees used the elevation funds to complete their home repair or reconstruction.

Under APA 60, the amount of elevation funds used for home repairs will be subtracted from the amount the homeowner owes back to the state.

Only Road Home participants who received Elevation Incentive funds and are not yet compliant with their elevation agreement will be eligible to have the costs considered for reclassification. Homeowners must provide documentation demonstrating that the elevation funds were used for valid home repairs or construction after their Road Home grant and other compensation, such as an insurance payment, were spent on repairs to the damaged structure.

Public Comments
The state is accepting public comments on the three Action Plan Amendments beginning today. The Action Plan Amendments can be found at APA58APA 59; and APA 60.

The formal public comment period for the three plans begins today, May 15, 2013 and runs until May 29, 2013, at 5 p.m. After accepting public comments, the state will submit the plans to the U.S. Department of Housing and Urban Development for final federal approval.

Citizens, community leaders and elected officials can access the plans and submit comments online by visiting http://www.doa.louisiana.gov/cdbg/dractionplans.htm and opening Action Plan Amendment 58, 59 or 60. A copy of the plans can be requested by calling (225) 219-9600.

Members of the public can submit comments several ways:

The Disaster Recovery Unit within the Office of Community Development is dedicated to helping Louisiana's citizens recover from hurricanes Katrina, Rita, Gustav and Ike. As the state's central point for hurricane recovery, the OCD-DRU manages the most extensive rebuilding effort in American history, working closely with local, state and federal partners to ensure that Louisiana recovers safer, smarter and stronger than before.

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