Road Home reaches its end, thousands of lawsuits against recipients pulled
This Dec. 31, 2005, photo taken in the Lower 9th Ward of New Orleans shows a house sitting atop of an overturned truck and leaning against another house. As Hurricane Katrina hit the Gulf Coast in the early morning hours of Aug. 29, 2005, a wall of the Industrial Canal broke drowning residents and knocking homes off their piers. (Photo courtesy Jarvis DeBerry)
NEW ORLEANS – The landmark and lambasted government program that attempted to make homeowners whole after Hurricane Katrina has come to an end, federal, state and local officials announced Thursday. The decision cancels thousands of lawsuits against Road Home recipients who used the money to fix their storm damages rather than the intended home elevations.
U.S. Housing Secretary Marcia Fudge joined Gov. John Bel Edwards, Congressman Troy Carter and Mayor LaToya Cantrell in the Lower 9th Ward to announce the program’s termination. The neighborhood was among the hardest hit in the 2005 hurricane season, which also saw Hurricane Rita pummel southwest Louisiana.
“For more than 17 years, many Louisianans have not had the freedom to fully move on from the pain and trauma of hurricanes Katrina and Rita,” Fudge said. “That changes today.”
Recovery money for the Road Home came from U.S. taxpayers through the Department of Housing and Urban Development (HUD). In all, more than $9 billion went to 130,000 residents through the program, according to HUD figures
More than 32,000 recipients received a $30,000 grant from the Road Home program to elevate their home, money that many used on repairs that their insurance claims or personal savings didn’t cover. An internal HUD review in 2010 revealed the money that hadn’t been spent on elevations.
With prompting from HUD, the state of Louisiana, which administered the Road Home through a third-party contractor, sued between 3,200 and 3,500 grantees to claw back the misspent funds. Those lawsuits will not be pursued, Edwards said.
There are currently 700 homeowners with Road Home court judgments against them, and 231 are in active judgment payment plans, according to HUD data. On average, they owe $46,000 to the state.
Another 2,365 homeowners are in active litigation over their Road Home debts.
“Today, all that stops,” Carter said to applause from the community center audience. “… There will be no further payments required from impacted homeowners.”
The Road Home’s closure offers no additional relief to homeowners who feel they did not receive enough grant money to make all the storm repairs they needed, Fudge said.
Nor does it appear there will be any remedy for program shortcomings revealed in an investigation by the Times-Picayune/New Orleans Advocate, WWL-TV and ProPublica investigation. It found lower-income homeowners were less likely to receive adequate resources to rebuild through the Road Home.
The same news partnership was first to report the state was suing homeowners to claw back elevation grant money. Officials stopped debt collections once that report went public.
The Road Home closure comes after the state agreed to cover its remaining debt to HUD. Edwards said $20.5 million will come from surplus state revenue in the current fiscal year’s budget, and $37 million will come from unused Road Home money. Another $12 million will come from a settlement with ICF, the state contractor that failed to ensure homeowners used the grants properly.
GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.