[StBernard] Another twist in the long and winding Road Home

[Westley Annis]

When the state changed its Road Home rules last month so homeowners without
mortgages could get their grant awards in a lump sum, nobody told the
recipients the funds would be held up at an Ohio mortgage bank until they
sign more legal documents. 

The latest Road Home delay affects 1,100 Road Home recipients who own their
storm-damaged homes outright, or one in every five people who have closed on
their grants to date. It's another example of how major changes in the
state's homeowner aid policy are slowing the process of doling out $7.5
billion in federal funds. 

Some homeowners without mortgages say it was only after their closings, when
their money hadn't arrived, that they learned about the additional wait and
the involvement of mortgage bank Chase Home Finance in Columbus, Ohio. 

Mydas Williams gave her contractor the go-ahead to start fixing the back of
her West Bank home, which she owns free and clear, when she closed on her
grant last week. She was told she'd have her money Monday, but when she
called Chase she was shocked, first to find out her money had gone to a
mortgage company at all, and second to learn the state had put a hold on it.


"Now what do I tell the contractor?" she said. 

Another grant recipient who owns his home outright, Michael Stapleton,
encountered problems even before the lump-sum policy came into effect March
22. He closed on his $47,900 grant for the Elmwood Park home he owns
outright back on Feb. 28, had finished all his repairs 11 months ago and was
told at closing he'd be getting all of his money in 10 days. Instead, he has
waited more than a month. According to Chase, the grant funds didn't arrive
in Ohio until last week. 

Now, Stapleton, Williams and the rest of the unmortgaged Road Home
recipients have to wait even longer because the state changed its program,
ostensibly to get money out faster. The state Office of Community
Development said it is sending out new legal covenants to the 1,100 affected
homeowners this week. Chase will get the go-ahead to pay them as soon as
they get the documents, sign them, get them notarized, send them back and
have them processed by the bank. 

The revelation comes as the balance of Road Home applicants, the estimated
80 percent of applicants who are carrying at least some mortgage debt, wait
for the state to come up with a new way to pay their grants. The state's
negotiations with lenders about adopting payment methods that would comply
with federal guidelines continued throughout the day Tuesday. A group of
state lenders proposed to let applicants borrow against the money in the
Road Home grant award letters to fund repairs right away. That would allow
the state to pay them in a lump-sum and still ensure it is used for
rebuilding. State officials declined to comment on that or other proposals
Tuesday. 
The state chose to change its payment policies after the U.S. Department of
Housing and Urban Development announced two weeks ago that Louisiana's
method of paying grants in installments as repairs are completed was not the
program the federal agency had approved. 

The homeowners without mortgages were supposed to be free of all those
concerns. The 1,100 of them who had closed on their grants signed covenants
promising to use the money to rebuild and to live in their fixed homes for
at least three years. To make sure they complied, the money was funneled
through Chase. 

A call to Chase's "LRA Department" in Columbus was not answered at 3:30 p.m.
and the department's voicemail was full. 

Chris Spencer, a spokesman for the bank in Louisiana, said Chase Home
Finance was working on a new dedicated phone system for Road Home clients.
He said the bank had agreed to handle these no-mortgage cases, at no charge
to the state or the Road Home program, because it has a vested interest in
seeing homes rebuilt. 

Initially, Chase was supposed to send out first installments of 10 percent
of each award, up to $7,500, as soon as it received proof repairs had begun,
and then it would use its inspectors to determine when each third of the
repair work got done so the rest of the money could be sent to the
homeowners. If work was done already, Chase was supposed to send out an
inspector to verify that, then send the full amount. 

But when the state ended the time-consuming disbursement payments for
unmortgaged properties on March 22, Chase was told to wait until the
homeowners could sign new covenants promising to live in their homes within
three years after getting the grant money. 

The state Office of Community Development put out a statement the same day
saying the money would be available to those without mortgages on April 2.
Not until Stapleton and others complained to The Times-Picayune did the
state acknowledge it had told Chase to hold onto the checks until the
homeowners could sign the new covenants. 

Meanwhile, Stapleton went on a world tour of telephone operators, speaking
to Chase representatives from Columbus to Manila, Philippines, some of whom
told him he now had a mortgage with the bank. Spencer said Chase didn't even
get Stapleton's grant payment until last week. On Monday, Stapleton got a
letter from Chase identifying his money with a loan number, even though he
had no loan. That's when he learned about the latest delay. 

"I finally managed to contact someone in the office where the letter
originated. She assured me that there was no mortgage against my house, but
she said that the original covenant agreement that we signed at our final
closing is no longer valid," Stapleton said. "I'll tell you, it can't get
any more screwed up than this." 

Chase says it's waiting on the state to release the checks, but Mike
Spletto, senior housing manager for the Office of Community Development,
said that doesn't explain why Stapleton and others are still waiting for
their first disbursements under the old policy. He said there is no hold on
the money and if a homeowner has completed repair work or needs to pay a
contractor, Chase should send that money. 

"The bank has signed a disbursement agreement, so if it's taking a month,
that's just unacceptable," Spletto said. "The banks are taking a while to go
out and inspect homes. Why Chase hasn't done this I can't answer." 

Spencer says it was the state's fault that it took a month for the bank to
get Stapleton's grant money.

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