[FoCHAT] CHAT: full article about LRA and HUD

[Melanie Ehrlich]

FoCHAT,
 
Sorry for the mixup on the links. Here are the LRA and HUD article plus one very pertinent online commentary.
 
Melanie
 
http://www.nola.com/news/index.ssf/2008/07/rule_changes_frustrate_road_ho.html

Rule changes frustrate Road Home applicants
by David Hammer, The Times-Picayune 
Friday July 25, 2008, 8:45 PM
Repeated changes in rules for the Road Home recovery program have gradually made it more difficult for applicants to collect the same grants they were once promised by the massive federally financed program.
When state officials launched the program in mid-2006, grant calculations were based on the highest pre-storm value available from various evaluation methods. Then, in early 2007, the state started paying for its own appraisals, gave priority to certain valuation methods and used the highest value only when applicants filed a dispute.
"Why should it only be on appeal that you get the highest value? Why differentiate and treat people differently?" said Frank Silvestri, an attorney who represents several homeowners in Road Home disputes.
Despite new leadership in Baton Rouge, the state has continued efforts to prevent the highest value from always being used. In May, the state agency overseeing Road Home, the Office of Community Development, said the program is using less than the highest pre-storm value to calculate as many as 65,000 grants, half of all grants Road Home is likely to pay out. And multiple state policy changes from December through this month have made it more likely that the program will use lower pre-storm values and decrease grants.
Meanwhile, the average grant size has plummeted from about $74,000 a year ago to about $59,000. The appraisal practices may have played a role in that decline, though the chief factor is probably that the most clear-cut and substantial claims were processed at the start of the program.
At the same time, state officials say some rules changes have made it easier for homeowners to challenge the home values on file and "appraisal shop." Housing and Urban Development, the federal agency that finances Road Home, has sent letters to the state warning against giving applicants too much control.
"I want to pay everyone as much as I can pay them, but I have to do it within the rules set out by HUD, " said Paul Rainwater, Gov. Bobby Jindal's point man for recovery. "Sometimes the homeowner is right, and sometimes the program is right. A 100 percent fairness is what we want."
Despite the Jindal administration's opposition, legislation passed in the last session required the Louisiana Recovery Authority to change Road Home rules so all applicants can get the highest pre-storm value in their file, even if it comes from an appraisal the applicant purchased. Jindal ultimately signed the bill, and Rainwater said the rule change will be made at the LRA's next meeting. But it must get HUD approval, and he doubts the federal agency will allow it.
Appraisal method
At issue is guidance HUD has sent Louisiana saying that homeowners shouldn't get credit for appraisals they provide that are more than 20 percent higher than the Road Home's own valuation methods. But homeowner advocates are concerned that there's a systematic effort to deny applicants the highest value created by the program itself.
That's what Jacob Groby III of Chalmette says he encountered during a two-year battle with program officials.
According to documents from his file, which he obtained after a months-long campaign by citizen advocates, the program had two pre-storm valuations of his house, prepared in February and March 2007: the first, a Fannie Mae "desktop appraisal" for $144,000, and the second, a real estate broker price opinion for $154,900, both based on comparable home values in his neighborhood.
In August, the program offered to buy Groby's home for $105,000, based on the lower appraisal minus insurance proceeds received. That offer was appropriate under program rules that favored the desktop appraisal method. Groby complained to an LRA housing committee in December, and program officials responded by increasing his grant to $115,156, based on the higher valuation.
Groby signed the act of sale on Jan. 17. But on Feb. 1, a Road Home staffer called Groby back for a meeting and asked him to sign papers reducing his award, based on the lower appraisal again. He refused to sign and formally appealed. But despite the rule that seemed to ensure it, that challenge still didn't trigger use of the higher appraisal.
"They're not even following their own written rules, " said Groby, 44, St. Bernard Parish's superintendent for water quality. "They did these evaluations, not me. If I did them and they questioned them, that's one thing. But these are their values."
Moreover, seven months after he sold the home to the state, he has yet to see a dime. The state has locked up the property, slated it for demolition and told Groby he is barred from going to court to collect his sale proceeds, Groby said.
State officials declined to discuss details of his or other cases.
Appeals process
Homeowner advocates from the Citizens Road Home Action Team fought for most of 2007 for a process that gave applicants more power to challenge which pre-storm value was used. It appeared they succeeded in late 2007, when they won the right for applicants to demand that Road Home perform full, long-form appraisals, instead of the drive-by appraisals the program had been using. But gradually, over the course of the past half year, the state has made subtle rules changes that have made a request for such a review appraisal a bigger gamble.
Applicants who appealed before Dec. 17 could ask for the full appraisal, called a "1004, " and rest assured that if it came in lower than the values already on file, they could at least collect their original award. Then, from Dec. 17 to March 4, if those who hadn't been paid yet asked for the 1004 and it came in lower, they were stuck with the lower grant, but there was still no risk for those who had already closed. And since March 5, anyone asking for a 1004 risked a lowered grant. Those who already closed now must give money back if their full appraisal comes in lower.
Still, applicants don't have to actually ask for a 1004. As long as they appeal, the rules guarantee them "the highest available pre-storm value" already in their files. But, as in Groby's case and many others, the program isn't always following that rule, according to the Citizens Road Home Action Team.
The group's co-founder Melanie Ehrlich said the state's apparent efforts against higher grants make little sense given Louisiana's success late last year in obtaining $3 billion from Congress and $1 billion from the state Legislature to keep the program afloat.
The state now has so much extra money from the congressional bailout -- about $1 billion -- that it has redirected it to an elevation grant program.
Under an earlier plan, the money for that house-raising effort was supposed to come from FEMA, not the Road Home. But Rainwater says some of the 28,000 people who signed up for the Road Home elevation grants may not have qualified for the similar assistance from FEMA.
U.S. Rep. James Clyburn, D-S.C., the House majority whip who ushered the Road Home bailout through Congress, was surprised to hear that the money he helped deliver is not being used to pay compensation grants.
"Because they kept moving the goal posts, now they're acting as if they got too much, " Clyburn said before a visit to New Orleans days ago. "I'll have to ask the local congresspeople about it."
. . . . . . .
David Hammer can be reached at dhammer at timespicayune.com or 504.826.3322.
 
 
Posted (at www.nola.com) by spellwizard on 07/25/08 at 9:39PM
I have been fighting the Road Home with everything I can muster. They keep finding everything under the sun and my application and all the documents .. But reading this really ticks me off to no end. When I received my award letter in June 2007, it said that my property was appraised for $189,500 and that I would receive $86,500 after they deducted my insurance proceeds. I looked at my file online a couple of weeks ago and saw there was another appraisal done. Now they say my property has been appraised as of December 2007 for the sum of $110,000 and now my grant would be $17,000 to $18,000....
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