Louisiana’s Office of Community Development has not recovered almost $963 million in federal grants to homeowners who didn’t follow the program’s rules, the Louisiana Legislative Auditor reports.
LLA suggests the state could be forced to pay back the money, though OCD says federal regulators have approved the state’s recovery process.
Of the 28,547 non-compliant files, OCD is trying to recover 17,353 worth almost $622 million, deeming the rest uncollectible for reasons such as death or bankruptcy, the report says.
The state also has identified almost $75.2 million in Small Rental Property Program loans to property owners who have not complied with the program’s rules.
In response to hurricanes Katrina and Rita, which hit in 2005, the state was awarded about $9.5 billion to administer the Homeowner Assistance Program as part of the Road Home program in accordance with an action plan approved by the U.S. Department of Housing and Urban Development. The state’s plan stipulates that eligible homeowners must agree in legally binding documents to follow through on certain actions in exchange for up to $150,000 in compensation for their damaged property.
In the early stages of the program, OCD focused on making payments to disaster victims as quickly as possible, assuming additional risks with the understanding that ineligible or unallowable payments would be detected and corrected in post-award monitoring, LLA says. Issues can include duplication of benefits, lack of documentation, and errors made by ICF International, the program’s former contractor.
In 2015, HUD amended the grant terms and conditions to formalize a partnership between the state and HUD and created the Road Home closeout plan, which continues to address noncompliance.
Pat Forbes, OCD’s executive director, says HUD has made four annual monitoring visits to check on the progress of the closeout plan, and the subsequent reports include no negative findings.
As for the rental program, OCD has sent default letters and initiated recapture efforts on 287 applicants who failed to meet federal objectives, Forbes says. An additional 450 files are in line with federal goals but out of compliance with state rules; in those cases, state officials focus on helping property conform with the program.
“The optimal outcome of these efforts is the continued provision of affordable housing through compliance,” Forbes said.