[StBernard] Road Home Applicants will Receive Lump Sum Payment Following Closing

[Westley Annis]

Road Home Applicants will Receive Lump Sum Payment Following Closing 

New Policy to Take Effect on Wednesday

BATON ROUGE, La. (April 9, 2007) - Road Home applicants who have mortgages on their properties will receive a lump sum payment for the full amount of their Road Home grant via electronic transfer in the days following their closing, rather than receiving it in disbursements as repairs are made to their homes, under a policy change announced today by officials from the Louisiana Recovery Authority (LRA) and the state's Division of Administration's Office of Community Development (OCD). 

The LRA advised that homeowners with mortgages will need to work with their lenders to meet their legal obligations and get additional loans along with their Road Home grant in case they need added resources for their repairs. 

"By providing lump sum payments, homeowners will get their full grant amount with no arrearages deducted by the Road Home program," said LRA Housing Task Force Chairman Walter Leger. "Nonetheless, we strongly urge homeowners to work with their lenders to meet their obligations and to get all the resources they need to rebuild. In some cases, this may mean additional borrowing. In addition, we believe that establishing a voluntary disbursement account with their lender would be a good way for homeowners to guard against creditors and fraudulent contractors."

In order to accommodate the new policy, the three-year occupancy requirement will be replaced with a revised covenant requiring homeowners to occupy the home at some point during the three-year period after closing. Also under the program's new guidelines, there will be no subordination of the covenant by lenders before closing

Avoiding Blight
Following the US Department of Housing and Urban Development's (HUD) recent reversal, community groups, lenders and real estate professionals raised concerns about an increase in blighted properties. 

"Because the original policy provided greater assurances that homeowners would use their grant awards to rebuild and repair, the LRA will work with the legislature and local officials to enforce effective anti-blight measures so our communities can once again become the vibrant neighborhoods we knew before August 29, 2005," said Leger.

Avoiding Unscrupulous Contractors
Because the original policy also helped protect homeowners from unscrupulous contractors seeking large, upfront payments, state officials recommend homeowners consult with financial advisors, lenders and housing counselors before beginning repairs. 

"To date we have received more than 2,100 contractor fraud complaints. As more people are able to make repairs and more people have money to spend, the unfortunate side effect could be more unscrupulous people trying to take advantage of them," said Louisiana Attorney General Charles C. Foti, Jr. "We will do everything in our power to help educate the public about contractor fraud and to protect homeowners. Citizens need to report any instance of suspect activity to the Attorney General's office or the Louisiana State Licensing Board for Contractors."

Timeline for New Policy 
Officials at the OCD said beginning April 11, 2007 Road Home applicants who have mortgages on their properties will receive a lump sum payment for the full amount of their Road Home grant via electronic transfer in the days following their closing. State officials are discussing with lenders ways for the policy to be applied to homeowners with mortgages that have already closed on their awards.

The policy change follows a similar announcement two weeks ago for homeowners without mortgages. Starting April 2, 2007, the Road Home program began issuing lump-sum awards directly to homeowners without mortgages. 

Hurricanes Katrina and Rita devastated South Louisiana, claiming 1,464 lives, destroying more than 200,000 homes and 18,000 businesses. The Louisiana Recovery Authority (LRA) is the planning and coordinating body that was created in the aftermath of these storms by Governor Kathleen Babineaux Blanco to lead one of the most extensive rebuilding efforts in the world. The LRA is a 33-member body which is coordinating across jurisdictions, supporting community recovery and resurgence, ensuring integrity and effectiveness, and planning for the recovery and rebuilding of Louisiana.

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