A report in the Times Picayune discusses the Louisiana's Road Home program agreeing to pay for certified local appraisers to correct tens of thousands of pre-storm home values in order to expedite the closing process of the federal grants to hurricane-displaced homeowners.

Road Home shifts stance on funding appraisals

Some homeowners have footed the bill

In response to public outcry, Louisiana's Road Home program has agreed to pay for certified local appraisers to correct tens of thousands of pre-storm home values in hopes of unclogging what may be the biggest bottleneck in getting federal grants to hurricane-displaced homeowners.

But it will do so using three intermediaries. The private company running the Road Home program will pay a California company to work through a Florida company to recruit and organize local appraisers. The California company will get $275 per appraisal, with the Louisiana appraisers getting $150 for each house value they recalibrate for the tens of thousands of Road Home applicants. The appraisers will start by focusing on the thousands of grant applicants who have challenged their awards based on what they consider erroneous pre-storm values.

It's the latest Road Home policy adjustment that aims to fix thousands of pre-storm home values that have been disputed by homeowners since the program began in June. The pre-storm value of a home is the starting point for the formula the Road Home uses to calculate grant awards. In December, the Louisiana Recovery Authority acknowledged that to avoid further errors, it needed to alter its initial policy, which allowed using only computerized models and real estate agent estimates to set pre-storm values.

But some applicants, while pleased that the LRA has changed some of its policies regarding appraisals, are upset at the timing of the latest move. That's because after the agency announced homeowners could get post-storm appraisals to establish their homes' pre-storm value, some of them went out and hired appraisers. Had they known the Road Home would end up paying for appraisals, they could've saved their money.

"It's like socialism; they punish the people who take the initiative by adopting what they did and giving it out to everyone for free," said Damien Regnard, who paid $350 for a new appraisal in January and got a pre-storm value that was more than $200,000 higher than what the Road Home had assigned to his Lakeshore home in November.

He and an unknown number of other discontented homeowners acted quickly to get full appraisals done, only to learn later that a less expensive, shorter appraisal is all that's needed.

Layers of subcontractors

ICF International, the company that will be paid as much as $756 million to run the Road Home program, brought in eAppraiseIt LLC, which is based in Poway, Calif., to coordinate the local appraisers. The appraisal company is majority-owned by First American Financial Corp., a subcontractor that was already part of a Road Home team assembled by ICF, which is based in Fairfax, Va. First American was already handling title searches and closings, flood data and the compiling of home values estimated by local real estate agents.

The subcontractor, in turn, has hired a Florida company, JVI, because it has a database of Louisiana-certified residential appraisers and can organize them to handle large chunks of appraisals in the neighborhoods they know the best.

Of 700 Louisiana residential appraisers who have received letters and phone calls, about 145 have agreed to perform the short-form appraisals for $150 each, said eAppraiseIt President Tony Merlo. JVI helps screen and train the local appraisers to make sure they can determine a property value before the storm, a bit of specialized work Merlo calls "forensic appraisal."

One experienced local appraiser said he is baffled by the decision to hire a series of outsiders to coordinate the effort to hire local people to do the work. Frank Delery of Delery Appraisals has been conducting appraisals in New Orleans for 38 years. He said he received a call this week from eAppraiseIt, asking him whether he would help and telling him 103,000 appraisals were needed.

"I wonder why, after eight months, they are just now deciding appraisals should be made when it was obvious from the start of the program that the proper foundation for any claims should be an accurate valuation of the property by an experienced, local appraiser," Delery said.

Amount of work unclear

Mike Spletto, senior housing manager for the state Office of Community Development, said there's no way of knowing how many new appraisals have to be done. That's because the Road Home has an unknown number of acceptable appraisal figures in hand, either from real estate agent estimates, appraisal databases maintained by quasi-governmental agencies such as Freddie Mae and Fannie Mac, or third-party appraisals from the year 2000 or later that homeowners have provided.

The computerized models the Road Home had been using and the work of appraisers who don't know the market rarely account for New Orleans' unique housing patterns, in which mansions often share blocks with two-bedroom shotgun homes and everything in between. The subcontractors from California and Florida say they recognize that and are committed to reaching as many certified Louisiana appraisers as possible.

"Computer models, by their very nature, tend to be homogenized," said Carl Bauchle, First American's engagement manager for the Road Home. "But 'homogenous' and 'New Orleans' are probably two words you wouldn't ever use in the same sentence."

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