Officials along with Gov. Blanco are headed to Washington on Tuesday to try to hammer out an agreement with the U.S. Department of Housing and Urban Development about the way Road Home grants are awarded. Both sides say they don't want to hinder the recovery program, but they clash over how the dollars should be given to homeowners.

More than 115,000 people whose homes were damaged in 2005 by Hurricanes Katrina and Rita have applied for Road Home Aid. About 3,000 have received grants.

Gov. Blanco mentioned recently that HUD, which oversees the $7.5 billion in federal aid used to pay for the Road Home, was throwing a new kink in the state's plans just as the private contractor running the Road Home had started quickening its grant awards.

"We've been playing by their rules this entire time. They are changing the rules just as we were speeding up the process," Blanco said.

HUD officials disagree, saying the state didn't explain that the program would force homeowners to receive their grants piecemeal through escrow accounts administered by lending institutions, rather than in one lump sum check. Mississippi's homeowner aid program issues one payment and doesn't involve escrow accounts.

If homeowners must get their grants through escrow accounts where they draw down dollars as they rebuild their home, that changes the federal requirements overseeing the program, HUD spokeswoman D.J. Nordquist said. In addition, forcing homeowners in the Road Home program to get their money in portions as they rebuild their homes makes the program a mandatory rehab program. She said that's not the program HUD approved.

Nordquist said the Road Home can continue its current grant award process, but Louisiana then will have to follow the environmental regulations established by Congress for rehabilitation programs. And she acknowledged the environmental regulations were costly and could slow down the grant program, but she said only Congress can waive the requirements.

Louisiana can avoid the environmental requirements, however, by giving homeowners the option of choosing an escrow account or a check, Nordquist said.

"It's their choice. They've created a fork in the road. If they continue down the fork that they're down, we have no choices. They are not in compliance with the law," she said.

Louisiana officials, including Blanco, said they were caught off guard with the word last week from HUD that the Road Home as currently designed could force the expensive environmental reviews.

Homeowners seeking aid from the Road Home must determine if they want to rebuild or take a buyout. Grants range up to $150,000. If homeowners choose buyouts and plan to move out of Louisiana, they face penalties to their grant awards.

Some homeowners have complained about the disbursement rules, saying they are entitled to receive their money and spend it as they please.

Blanco said the Road Home set up escrow accounts to relieve pressure on homeowners from banks, who were threatening foreclosures and seeking to take the grant aid to pay off mortgages because they were afraid homeowners wouldn't repair their homes with the dollars. The governor said lenders wanted assurances the money would restore the value to the homes.

Blanco said HUD was aware of the program design, including the escrow accounts, before the state launched the Road Home.

Nordquist disagreed but said HUD wants to work with Louisiana officials and would not penalize the state for grants already awarded or in the pipeline.

"We share the goal of trying to rebuild the Gulf Coast as fast as possible," she said.

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