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Louisiana Road Home Program |
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Thursday, 12 April 2007 |
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The Road Home Program has received approval from the department of Housing and Urban Development to amend the Program (as previously discussed). Please see the following Press Release from the Road Home Program.
The Louisiana Recovery Authority has announced a number of policy changes to The Road Home program. These changes affect both the process by which final verifications required prior to closing on a Road Home grant are determined, as well as the manner in which grant funds are disbursed.
- The policy changes announced by the LRA will not affect most of the steps in The Road Home process. Applicants will still need to move through the process to get to the closing step.
- Following is a brief overview of some of the new changes:
LUMP-SUM DISBURSEMENTS
Homeowners without mortgages
- As previously announced, homeowners without mortgages who closed on or after April 2 will receive their Road Home grant via check by mail or electronic funds transfer within two weeks following their closing.
- Homeowners without mortgages who closed prior to April 2 will receive a letter from the State notifying them that lump-sum payments are now available and providing information and instructions on the revised Covenant and Grant Agreement to be executed. Homeowners will be required to sign, notarize and return the revised Covenant and Grant Agreement to receive their funds. Upon the State’s receipt of the revised documents, a check will be mailed to the homeowner for the balance of funds in their disbursement account.
Homeowners with mortgages
- Beginning April 11, all homeowners who choose Option 1: Stay, will receive lump-sum disbursements of their Road Home grants.
- Homeowners with mortgages who closed on their awards prior to April 11 are encouraged to consult with their mortgage lenders to arrange for the release of their Road Home funds from their disbursement accounts. State officials are discussing with lenders ways for the lump sum disbursement policy to be applied to homeowners with mortgages that have already closed on their awards. However, some lending institutions may impose certain conditions on the homeowners with respect to their Road Home awards.
COVENANT AND GRANT AGREEMENT REVISIONS – Applies to all homeowners (both with and without mortgages)The Covenant and Grant Agreements that are signed at closing have been revised as a result of the policy changes. The changes to the agreements are listed below. Homeowners who closed under t the previous polices (Before April 2 for homeowners without mortgages and before April 11 for homeowners with mortgages) must sign revised Covenant and Grant Agreements before any lump sum disbursements can be made. A comparison of the old and new grant covenants is as follows:
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Old Covenant and Grant Agreement |
New Covenant and Grant Agreement |
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Use of property
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Primary residence only |
Primary residence only |
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Occupancy requirement
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3 years following final disbursement |
Within 3 years of closing |
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Additional Compensation Grant (formerly “Affordable Compensation Loan”)
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5 years following final disbursement – covenant requirements could not be assigned to a new homeowner |
Within 3 years of closing – standard assignment rules apply |
| Homeowner’s Hazard Insurance |
From the date of final disbursement, hazard insurance must be maintained for 3 years (or 5 if ACL is received) |
For 3 years from the date of closing once the property is occupied |
| Flood Insurance (if home is located in a Special Flood Hazard Area) |
From the date of final disbursement, flood insurance must be maintained in perpetuity |
Once the home becomes insurable, flood insurance must be maintained in perpetuity |
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Building Code Requirements
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Property was required to comply with local codes prior to the final disbursement
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No longer a requirement. Property must meet local jurisdictional requirements |
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Grant Repayment (in cases of covenant default)
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Once the Certificate of Final Disbursement was filed, the compliance period went into effect. From that date until the compliance period terminated, homeowners had their repayment obligation lessened on a pro rata basis
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Repayment amount due on grant in cases of default are not forgiven over time on a pro rata basis. If a default occurs anytime between closing on the grant and 3 years later, the entire grant amount must be returned |
The new Grant Agreement continues to say that the property must become occupied as your primary residence, but it now states that this must occur within three years of the date of closing. The Covenant continues to restrict use of the property - that is the home cannot be used for rental or business purposes. However, the period for the restriction has been changed to three years from the date of closing. The revised covenant also requires that homeowner’s hazard insurance must be maintained from the date the property becomes occupied, until three years after the closing date. Flood insurance continues to be required if the property is in the Special Flood Hazard Area (even if your home is undergoing repairs and you are not physically living in it). Furthermore, low to moderate income homeowners who accept Additional Compensation Grants (formerly called “Affordable Compensation Loans”) no longer have different covenant obligations with respect to occupancy. The former policy required owner-occupancy for five years.
- In the coming days and weeks, we will continue to provide additional information as implementation plans become final.
- Please note the following pages may contain information that is no longer current in light of the recently announced changes. The content is being revised to reflect these changes.
The Press Release is currently posted as the homepage, available by clicking here.
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