Hurricane Katrina

Homeowner checks to start being mailed next week

GULFPORT - The governor's office expects the first of thousands of Katrina homeowner-grant checks to be mailed starting next week, in spite of opposition from mortgage companies and watchdog groups who say the program is ripe for fraud.

"I'm guessing the process will take several weeks, but this is the beginning of the closing process," Buddy Bynum, spokesman for Gov. Haley Barbour, said Thursday. "Our position is we're moving forward until every nickel of this money is in the hands of an applicant that needs it desperately."

In an unprecedented, nearly $4 billion program approved by Congress and the U.S. Department of Housing and Urban Development, Mississippi is providing federal grants of up to $150,000 each to homeowners who lived outside the federal flood plain but lost their houses to Katrina's water. Louisiana is conducting a similar grant program.

The Mississippi Development Authority, administering the federal HUD grants in this state, began taking applications in April. More than 16,500 have applied.

Payouts had been delayed in recent weeks because of opposition filed with HUD from the Mortgage Bankers Association, Citizens Against Government Waste, Catholic Charities USA and numerous other organizations.

They say by giving the money directly to homeowners instead of going through mortgage companies, recipients will be more susceptible to con artists and scammers and the arrangement will mean many hard-hit neighborhoods won't be rebuilt.

Barbour has said one reason for giving the money directly to homeowners is it would allow them to relocate to higher ground, if they so choose. He has said the grants would still be subject to mortgage and other liens, similar to insurance payments.

And up to $5 million of the money is available to the new Hurricane Katrina Fraud Prevention and Detection Unit, a partnership between the State Auditor's Office, U.S. attorney and other federal and local law enforcement to ride herd on the homeowner-grant money.

Bynum said despite the opposition filed with HUD, "We are proceeding as if that will be resolved in the state's favor" and "we have some indications that we should go ahead and proceed."

"As the governor has said from the beginning, there are multiple layers of safeguards in this program that we have built in at various stages to minimize the instances of fraud," Bynum said. "I say minimize, because we may not can eliminate it altogether. But we are confident in the transparent nature of the process, because there are so many eyes at so many levels watching over the process, we are confident is it going to work very well. But we want to caution anybody with fraudulent intentions: There are many auditor types and investigator types who are going to be looking over this entire program from the very beginning."

For answers to some frequently asked questions about the grants, see www.sunherald.com


Questions and answers

Answers to some commonly asked questions about the grants:

Question: What is the purpose of this grant?

Answer: To provide financial assistance to those homeowners outside the flood plain whose homeowners insurance did not cover structural flood damage.

Question: Can the grant funds be used to pay off a mortgage?

Answer: Uses of the grant proceeds are at the discretion of the homeowner, as they work through their personal disaster recovery situation.

Question: What are the restrictions for the use of the funds? Do I have to rebuild or repair?

Answer: First, any SBA disaster loan for structural damage must be repaid. Second, if the homeowner has a mortgage, the mortgage holder may use funds to make past due payments to bring the mortgage current. After that, management and use grant proceeds are at the discretion of the homeowner for any legal purpose as the homeowner works through their personal disaster recovery situation.

- Mississippi Home Help Web site

  Comments