A recent report discusses the Louisiana Road Home Program and the issues facing mortgage companies regarding the buyout plan.

Bankers Seek Answers On Housing Grants
   Now that federal funding is in place for the Road Home program, state bankers are seeking answers from the Louisiana Recovery Authority on how financial institutions fit into the housing rebuilding and buyout plan. Strictly speaking, they don't.

   Under the Road Home plan, grants of up to $150,000 will be paid directly to homeowners and not jointly to mortgage holders, as with insurance settlements. The state's newly chosen contractor, ICF International of Fairfax, Va., will act as the disbursal agent. Homeowners will have to sign covenants to pledge to use their grants to repair, rebuild or buy another house in Louisiana.

   LRA officials say that, under HUD rules, issuing the checks jointly would trigger environmental audits that would cause months of further delays. LRA Director Andy Kopplin says the state has asked for a waiver but will get the process moving without it.

   Bankers want to know how the covenants will work for fear that homeowners could divert the money and not repair their homes, or be victimized by unscrupulous contractors, leaving banks with devalued assets. "We and the LRA have the same objective to see that people get their money and repair their houses," said Louisiana Bankers Association director Robert Taylor.

   The banks' greatest concern is with those homeowners who decide to sell but not to relocate in Louisiana. They would get only 60 percent of their houses' pre-storm value, but mortgage holders could wind up with nothing but destroyed houses. The state and local communities would lose too if they cannot secure clear titles to properties to redevelop them.

To view the report please click on the following link.

Bankers Seek Answers On Housing Grants
(page 3)