The New Orleans City Council is calling on the state to stop its practice of filing lawsuits against thousands of Louisiana residents who took part in a home-restoration program in the wake of Hurricanes Katrina and Rita.
The City Council passed a resolution on May 19 that urged state officials to relieve residents of any legal obligation to repay loans provided during the “Road Home” program, citing “years of evidence of mismanagement and miscommunication to residents from the state’s own contractor hired to administer the program.”
State officials have said that the program came with stipulations about how loans and grants were supposed to be used. Much of the money was conditioned on residents using the money to elevate their homes to provide better protection during future storms and flooding, according to the Booth & Booth law firm in New Orleans.
The extent of the litigation filed against homeowners was revealed by an investigation carried out by journalists at WWL-TV, The Times-Picayune and ProPublica. The reason a high number of lawsuits were filed – estimated at more than 4,000 – was because the state was facing a statute of limitations to claw back the home-restoration money allocated, according to Booth & Booth.
The state Office of Community Development noted that the Road Home program was created to get affected citizens back into their homes as soon as possible after storm damage.
“As part of its mission to speed recovery from these disasters, the Road Home program continues to pursue every avenue to help residents become compliant and keep the recovery funds,” the office’s executive director, Pat Forbes, told the Louisiana Record in an email. “At the same time, the program must also take all required steps to recapture grant funds where the homeowner has not complied with program requirements.”
In addition, state officials have been working with the U.S. Department of Housing and Urban Development (HUD) to wrap up the program and end compliance enforcement, according to Forbes.
“To date, we have not received a response from HUD that there is a route to allow the state to cease these efforts without liability of the state to HUD for not enforcing the state’s program documents,” he said, adding that state officials would continue to work with the state’s congressional delegation and HUD to resolve the issue.
The legal effort to recapture home-restoration money that was not used as intended can be potentially costly for residents because judgments may include interest, attorney fees and court fees.