[StBernard] Rule changes frustrate Road Home applicants

[Westley Annis]

Rule changes frustrate Road Home applicants
by David Hammer, The Times-Picayune 
Friday July 25, 2008, 8:45 PM
Repeated changes in rules for the Road Home recovery program have gradually
made it more difficult for applicants to collect the same grants they were
once promised by the massive federally financed program.

When state officials launched the program in mid-2006, grant calculations
were based on the highest pre-storm value available from various evaluation
methods. Then, in early 2007, the state started paying for its own
appraisals, gave priority to certain valuation methods and used the highest
value only when applicants filed a dispute.

"Why should it only be on appeal that you get the highest value? Why
differentiate and treat people differently?" said Frank Silvestri, an
attorney who represents several homeowners in Road Home disputes.

Despite new leadership in Baton Rouge, the state has continued efforts to
prevent the highest value from always being used. In May, the state agency
overseeing Road Home, the Office of Community Development, said the program
is using less than the highest pre-storm value to calculate as many as
65,000 grants, half of all grants Road Home is likely to pay out. And
multiple state policy changes from December through this month have made it
more likely that the program will use lower pre-storm values and decrease
grants.

Meanwhile, the average grant size has plummeted from about $74,000 a year
ago to about $59,000. The appraisal practices may have played a role in that
decline, though the chief factor is probably that the most clear-cut and
substantial claims were processed at the start of the program.

At the same time, state officials say some rules changes have made it easier
for homeowners to challenge the home values on file and "appraisal shop."
Housing and Urban Development, the federal agency that finances Road Home,
has sent letters to the state warning against giving applicants too much
control.

"I want to pay everyone as much as I can pay them, but I have to do it
within the rules set out by HUD, " said Paul Rainwater, Gov. Bobby Jindal's
point man for recovery. "Sometimes the homeowner is right, and sometimes the
program is right. A 100 percent fairness is what we want."

Despite the Jindal administration's opposition, legislation passed in the
last session required the Louisiana Recovery Authority to change Road Home
rules so all applicants can get the highest pre-storm value in their file,
even if it comes from an appraisal the applicant purchased. Jindal
ultimately signed the bill, and Rainwater said the rule change will be made
at the LRA's next meeting. But it must get HUD approval, and he doubts the
federal agency will allow it.

Appraisal method

At issue is guidance HUD has sent Louisiana saying that homeowners shouldn't
get credit for appraisals they provide that are more than 20 percent higher
than the Road Home's own valuation methods. But homeowner advocates are
concerned that there's a systematic effort to deny applicants the highest
value created by the program itself.

That's what Jacob Groby III of Chalmette says he encountered during a
two-year battle with program officials.

According to documents from his file, which he obtained after a months-long
campaign by citizen advocates, the program had two pre-storm valuations of
his house, prepared in February and March 2007: the first, a Fannie Mae
"desktop appraisal" for $144,000, and the second, a real estate broker price
opinion for $154,900, both based on comparable home values in his
neighborhood.

In August, the program offered to buy Groby's home for $105,000, based on
the lower appraisal minus insurance proceeds received. That offer was
appropriate under program rules that favored the desktop appraisal method.
Groby complained to an LRA housing committee in December, and program
officials responded by increasing his grant to $115,156, based on the higher
valuation.

Groby signed the act of sale on Jan. 17. But on Feb. 1, a Road Home staffer
called Groby back for a meeting and asked him to sign papers reducing his
award, based on the lower appraisal again. He refused to sign and formally
appealed. But despite the rule that seemed to ensure it, that challenge
still didn't trigger use of the higher appraisal.

"They're not even following their own written rules, " said Groby, 44, St.
Bernard Parish's superintendent for water quality. "They did these
evaluations, not me. If I did them and they questioned them, that's one
thing. But these are their values."

Moreover, seven months after he sold the home to the state, he has yet to
see a dime. The state has locked up the property, slated it for demolition
and told Groby he is barred from going to court to collect his sale
proceeds, Groby said.

State officials declined to discuss details of his or other cases.

Appeals process

Homeowner advocates from the Citizens Road Home Action Team fought for most
of 2007 for a process that gave applicants more power to challenge which
pre-storm value was used. It appeared they succeeded in late 2007, when they
won the right for applicants to demand that Road Home perform full,
long-form appraisals, instead of the drive-by appraisals the program had
been using. But gradually, over the course of the past half year, the state
has made subtle rules changes that have made a request for such a review
appraisal a bigger gamble.

Applicants who appealed before Dec. 17 could ask for the full appraisal,
called a "1004, " and rest assured that if it came in lower than the values
already on file, they could at least collect their original award. Then,
from Dec. 17 to March 4, if those who hadn't been paid yet asked for the
1004 and it came in lower, they were stuck with the lower grant, but there
was still no risk for those who had already closed. And since March 5,
anyone asking for a 1004 risked a lowered grant. Those who already closed
now must give money back if their full appraisal comes in lower.

Still, applicants don't have to actually ask for a 1004. As long as they
appeal, the rules guarantee them "the highest available pre-storm value"
already in their files. But, as in Groby's case and many others, the program
isn't always following that rule, according to the Citizens Road Home Action
Team.

The group's co-founder Melanie Ehrlich said the state's apparent efforts
against higher grants make little sense given Louisiana's success late last
year in obtaining $3 billion from Congress and $1 billion from the state
Legislature to keep the program afloat.

The state now has so much extra money from the congressional bailout --
about $1 billion -- that it has redirected it to an elevation grant program.

Under an earlier plan, the money for that house-raising effort was supposed
to come from FEMA, not the Road Home. But Rainwater says some of the 28,000
people who signed up for the Road Home elevation grants may not have
qualified for the similar assistance from FEMA.

U.S. Rep. James Clyburn, D-S.C., the House majority whip who ushered the
Road Home bailout through Congress, was surprised to hear that the money he
helped deliver is not being used to pay compensation grants.

"Because they kept moving the goal posts, now they're acting as if they got
too much, " Clyburn said before a visit to New Orleans days ago. "I'll have
to ask the local congresspeople about it."

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