April 29th, 2008
10:34 AM ET

They gave him money to fix his house. Now they want it back.

New Orleans residents affected by Katrina may have to pay back the money they were given in grants.
New Orleans residents affected by Katrina may have to pay back the money they were given in grants.


Randi Kaye
360° Correspondent

Every time I go to do a story in New Orleans I hold onto a little piece of hope that things are going to be better this time.

That the community is going to be more healed, that the town is going to look more alive, and that the programs put in place to help homeowners are actually doing so.

Well, I should have known better.

Imagine this: Louisiana residents – after all they’ve been through and all they’ve lost – are now being billed by the state for nearly $200 million!

Yes – you read that right, $200 million.

Why? Well – it turns out the contractor hired by the state to dole out federal dollars designed to help homeowners rebuild... uh... well... how do I say this... OVERESTIMATED!!

The contractor, ICF International, may have overpaid as many as 5000 residents. In other words, the state gave these people too much grant money after state inspectors estimated home damages.

In all, homeowners could be asked to pay up $175 million. Some families could be on the hook for $150,000 each!

I interviewed a New Orleans man named John Montegut who had spent about $100,000 repairing his home. About $20,000 of it was from a state grant, part of that federally funded Road Home program to aid homeowners. Well, he just got a bill in the mail for $13,000 from the state telling him they’d overestimated his grant payment.

How’d that happen? Montegut told me the state’s inspector included in his damage claim the repair of six skylights (he doesn’t have any skylights!!) and the replacement of 22 windows which were far above the water levels and completely unharmed. Montegut says the inspector was in his house for five minutes and he was not allowed to see the damage claim so had no way of knowing what was included.

Here’s the killer: Montegut doesn’t have the money to pay the state. He spent that money fixing up his house. But he and every other homeowner who got a grant signed a contract with ICF agreeing to pay money back if overpayments were later discovered. Now remember, he wasn’t even allowed to see his paperwork. Montegut told me he never expected he’d owe the state money. But it turns out the actual cost of repairing his house was far greater than the grant anyway.

The contractor, ICF, told us it is a federally funded program and the state is demanding that it ask for repayments. ICF is promising a “compassionate process” and says it doesn’t expect a large number of families to be affected but we’ve learned from an advocate for the homeowners about 300 families have already been billed. The state plans to fine ICF for its mistakes and it plans to hire an auditor to review every case.

Is it cruel, as homeowners have said, to ask residents for money back after all their suffering following Hurricane Katrina? Or, as resident John Montegut told me, “They (ICF) made mistakes all along, why should people suffer?” What do you think? We'd like to know.

Program Note: See Randi Kaye's “Keeping them Honest” report on AC360 tonight at 10pm.


soundoff (601 Responses)
  1. steve Pa

    The Gov isn't there to help you it is there to help itself. If you actually think it is working for Americans, you are wrong.

    April 29, 2008 at 12:33 pm |
  2. sachincko

    Thank you CNN for your great reporting. You are by far the most informative, fair, balanced news organization. Once again, Thank you for the care and desire for truth, not political correctness, you transmit through your broadcast.

    April 29, 2008 at 12:32 pm |
  3. Valerie

    Great job reporting on this.

    April 29, 2008 at 12:32 pm |
  4. Amy P

    Once again, everyone blames the federal government. Please read the blog entry again... this is LOUISIANA that is asking for the money back, because THEIR contractor messed up!! This is not our country, this is a corrupt state government that the citizens of Louisiana seem to reelect despite mounting evidence of their extreme incompetence.

    The STATE botched Katrina. The FEDS offered the sort of help that a federal government ought to offer. It's up to LOUISIANA to help its citizens at this point... and they have failed.

    April 29, 2008 at 12:31 pm |
  5. Tina

    ICF has mismanaged the Road Home contract from the beginning, and their penalty has been....you guessed, a bigger contract. Google "ICF Katrina", and read the horror stories.

    I knew this was a complete failure when I saw a classified ad in the Baton Rouge newspaper for a Director of Data Services for ICF/Road Home, looking for a person to design and manage the database of applicants – and this ad was placed in early 2007!

    The people of Louisiana are used to bloated, over-budget, wasteful and inefficient government programs, but I had so hoped that Road Home would be differed.

    April 29, 2008 at 12:31 pm |
  6. Debbie

    I live in New Orleans and there is nothing sad about people who were overpaid monies having to pay the monies back. I know people who received excess money, not deliberately, but they knew they dd. There are many who did not receive a fair amount of money and the excess others were paid should be given to those people. . This was an unprecedented event and mistakes will happen. Since the Road Home Program originally made the errors, they should tread lightly and make sure people were overpaid. To all the critics of New Orleans and our government, it's not perfect, but ask yourself how your state would handle having 80% of a large city damaged by a man made disaster. The Federal Government oversaw the construction and finances of the levee's built here, they bear more of the burden for this nightmare. Stop the hate on the victims such as myself. Many could not survive what we did and still continue to endure.

    April 29, 2008 at 12:31 pm |
  7. David

    I live 8 miles north of Biloxi, MS.We were greatly affected over here and some people received grants and other's did not, but were asked to refile multiple times.What gets me with this whole Katrina chaos is that the first response was too saddled by red tape, the insurance issue is now discouraging rebuilding after the BIG insurance still made record profits, and I don't think we would see any better response on a second round.The part that hurts the most is that we are blowing billions in Iraq and other countries that hate us while we can't afford health coverage, alternate fuels to fix the dependency we were suppose to correct in the early 80s and selling off all the good jobs to China and other CHEAP labor countries that have NO quality control over the products we now use and consume.WAKE UP POLITICIANS AND BIG BUSINESS BEFORE THERE IS NO MORE US!!!!

    April 29, 2008 at 12:31 pm |
  8. Natalie

    What caused the state to revisit these particular grants? How was it determined later that the damage assessments were too high? One would think that if there were resources available at the outset to verify or double-check the contractors estimates, they would have used them. The results of their incompetence is that these families' financial struggles will now be prolonged, and the monies that they are now expected to repay could have been used all along to assist other families waiting for financial resources to help them to put their lives back together. I think that ICF should face more than a few fines, and the state should wake up and get their act together!

    April 29, 2008 at 12:30 pm |
  9. Mike Janouski

    It has been many many years since Hurricane Agnes devastated the state of Pennsylvania but after going through that it, it is no surprise to me that our government, both state and Federal, regardless of the state involved, are so ignorant of the financial problems that occur every time a disaster occurs. People have an urgent need to reestablish their living conditions and therefore are ignorant of the red tape and legalease that is written into government funded contracts. It is also not surprising to me that these governments continue to contract out the services of assessing, processing, and issuing damage funding with total disregard of the lessons learned from other similar disasters. How many times are these governments going to allow for the scandalous repeat of political ineptness and disregard for it taxpayers. They have ignored the fact that there are scupulous people and politicians everywhere who are anxious to take advantage of every opportunity to fraudulently obtain financial funding regardless of who it affects. Again it is time for a change

    April 29, 2008 at 12:29 pm |
  10. Susan Meyers

    Unless outright fraud was committed (collecting for a property a person didn't own or a family member who didn't die), the victims of Katrina owe the government NOTHING! In fact, George W. Bush should be down there, hat in hand, offering his apologies and cold hard cash to try to make up to those poor people what the federal government has done (or in this case, not done) for citizens of this country who lived through a disaster of this magnitude. It is unconscionable that people are still living in these conditions almost three years after the hurricane decimated their city. No other city in the country would have been left in these dire straits and I firmly believe it is the racism of the current administration that is responsible.

    If anyone (or entity) should be made to pay back money to the government it should be Halliburton who has probably skimmed almost as much money from New Orleans as they have from Iraq!

    April 29, 2008 at 12:29 pm |
  11. Douglas

    How hard is it to get citizenship in Canada? This country is going to HELL and the government is doing nothing. I see why there are revolutions in other countries.

    April 29, 2008 at 12:29 pm |
  12. C

    This kind of stuff keeps happening b/c we have a president who, instead of thinking about why this happens and how to prevent such things from happening again, appears on gameshows (ie. he was on Deal or No Deal last Wed)! There's a war going on, our economy's tanking, gas prices are soaring....the list goes on....but our president thinks going on a gameshow is a much better use of his time than thinking of solutions to any of these problems. No wonder catastrophies continue to occur...

    April 29, 2008 at 12:29 pm |
  13. carol trumbo

    stop adding more injury to the people of our area. wake up america and take care of your own.my father still had a fema trailer when he died in may 2007 and when my step mother died in october 2007.they suffered great pain never being able to move back in their flooded home. it took in eleven feet of water. their only wish was to move out of the trailer in to their home but they moved in to a grave instead!!!!

    April 29, 2008 at 12:28 pm |
  14. David Berg

    I can not help but wonder how much it will cost to hire the auditor to review each and every case. Perhaps they could just use that money to pay back the over payments???

    April 29, 2008 at 12:28 pm |
  15. john N

    Subcontract this, grant money for that, and another agency doing paperwork for this, and even another agency taking care of auditing...

    You want big government and layers of red tape? Enjoy.

    April 29, 2008 at 12:28 pm |
  16. Don

    I'm going to play the devil's advocate here. We all know the hardest hit places were also the most impoverished. The homes in these neighborhoods were not worth $100K before Katrina so what makes people think they will be after the fact? Secondly, this is similar to the mortgage issue happening now. People signing documents and agreeing to things but later recanting and saying they had no idea what they were signing. People have to come to grips with reality. The government is not looking out for you anymore. Stop expecting handouts and relying on a system that has been broken for decades. Yes it is a tragedy people lost their lives and their homes, but why one would even choose to rebuild in a place that is below sea level and still in danger is beyond my comprehension. If the government failed the first time what makes people think the rebuilt damns will hold up against another storm that is sure to happen again? The state should absorb the costs and people should move on. If another storm hits and the same homes are damaged again, I say the people are on their own.

    April 29, 2008 at 12:28 pm |
  17. Senobia

    I can't feel sorry for the majority of these folks because of the blatant disregard for the help they were given. I saw firsthand how appreciative these people weren't at shelters I volunteered at in Texas. All this coupled with all the crimes they committed in the towns that welcomed them with open arms and the gross misuse of government relief monies that were given to them for necessities being spent at beer stores and high end boutiques – I just don't have much sympathy left. Sorry, folks.

    I'm sure a great many good people will be affected by this, but I'm also sure that a greater number of bad ones are getting their just desserts.

    April 29, 2008 at 12:27 pm |
  18. Justin Kownacki

    How can a person be bound by an agreement that they weren't allowed to see? (Granted, why would anyone sign that agreement in the first place?)

    This looks like another example of a government agency attempting to cash in on a disaster. Instead of investing in resources to prevent widespread damage, they look for ways to maximize collateral fallout and their own fiscal gain.


    April 29, 2008 at 12:26 pm |
  19. me

    Oh please,
    I worked for the government and saw behind the scenes of this mess. Believe me the majority are all opportunists. Dont feel too bad. Your tax dollars are being wasted! Ask this gentleman what the value of his house was originally – probably $50K.

    April 29, 2008 at 12:26 pm |
  20. Joe

    What don't you people get, if you were given money you shouldn't have then pay it back. Everyone who recieved grant money signed papers saying if you get overpaid then the money will have to be returned. The whole point was to get people money as fast as possible, and everyone knew mistakes would be made, so PAY THE MONEY BACK. And yes I'm from New Orleans, and I was overpaid and I have no problem paying back the money, that was the deal!

    April 29, 2008 at 12:25 pm |
  21. Linn Gray

    They should be able to sue the federal government for the dyke failures and poor response after Katrina. Any settlement should far exceed $1.75million.

    Talk about a moral deficit in our federal and state governments...

    April 29, 2008 at 12:25 pm |
  22. Tammy

    i don't think the homeowner should have to pay for someone's elses mistake and i think these people have gone threw more then enough. let the gov eat the loss!!

    April 29, 2008 at 12:24 pm |
  23. Jodi

    Shame on us for thinking people would get some help from the government to help them "survive". Hurricane victims didn't even have money for food for cryin' out loud! Businesses where destroyed which meant no income for workers and yet the government hired these contractors, which I am sure are not the only ones by far, who only took these people for granted. Homes were washed away and government contractors only thought about reaping some benefits for themselves! Why??....did they think they deserved it for helping people out??!! Maybe we all need to remember that many, many humans do horrible things to others but karma always comes back around!

    April 29, 2008 at 12:24 pm |
  24. Kevin

    What's the big deal? Money that was paid out erroneously under the auspices of the state, is now being asked to be repaid. I call that fiscal accountability. If a family found out they were receiving $150,000 beyond what would be reasonable, don't you think they would notice? This is just sensationalist reporting.

    April 29, 2008 at 12:24 pm |
  25. Barry IL

    This is tragic news, indeed. The way some of our systems work is sickening. Sometimes I just sit down and wonder why we go down so low. USA is the greatest nation on earth. We can do better. Reality check! I don't believe anymore that we have the greatest political system on earth these days. Something is terribly wrong somewhere.

    April 29, 2008 at 12:23 pm |
  26. Monique Manna - Southbridge, MA

    Personally – I don't think anyone should be bailed out anymore. We all know how to read and if not then things should not be signed – on the other hand – these victims should have demanded to look at paperwork and not have been taken advantage of.

    Let's ask President Bush what he thinks – maybe he will have an answer!

    April 29, 2008 at 12:22 pm |
  27. Beth

    Bottom line...ICF should be charged.

    April 29, 2008 at 12:22 pm |
  28. Sadie Marie

    I live in the hardest hit Katrina area of the MS Gulf Coast, and I find this article somewhat amusing. We were given state grants, up to $100,000 and, let me tell you, quite a bit of the money went for frivolous items: pools, European vacations, plastic surgery, designer clothes, etc. Then, we either did not repair our houses or had free labor to do it. Actually, now that the funds are running low, we are kind of hoping another storm will head this way. Life was better than ever for awhile.

    April 29, 2008 at 12:21 pm |
  29. Lily

    What I don't understand here is, why the homeowner's are the one's to pay for this mistake. Most of these people didn't get the amount they truly needed to make the necessary repairs, and yet, they have to repay money now? If anything, ICF should not only be fined, but required to pay the monies owed. This should not be the homeowner's fault or responsibility. The contractor made a major mistake, and they should pay for it. Those residents have suffered enough – almost 3 years later and the city is still nowhere it needs to be.

    April 29, 2008 at 12:21 pm |
  30. Lynne Cohen

    Doesn't surprise me at all!!!!!!!!!!
    Take a good look at our country....better yet, take a good look at our government.
    We are "The Greatest Show on Earth"......in other words, we have become a "Circus".

    April 29, 2008 at 12:21 pm |
  31. Frances

    I am a Katrina victim and received Road Home Grant Money. We were given this money as a "grant" which is something that which I understood oes not have to be paid back – SBA Loan – yes. However, we had to add whatever money we received from the Road Home as income to our taxes, which put us in a higher bracket, and now have to pay back some of what they gave us. The whole idea of the Road Home Program was to keep residents in Louisiana. They kept some of us but at a cost to help line their own pockets. As usual, the government gives it to you in one hand and takes it away in the other. If I would have sold my home outright to an individual then I would not have had to add it as income. Go figure. This is our government at work again. Also, the stimulus money we were going to receive has now been cut in half since the Road Home money we had to claim has put us in a higher tax bracket.

    April 29, 2008 at 12:21 pm |
  32. Brian in Austin via NOLA

    NOLA and LA in general proves yet again to be a hellhole of mismanagement and corruption.

    April 29, 2008 at 12:21 pm |
  33. Paul Fisher

    Boo hoo... you sign a contract saying you'll pay it back if they overestimated then you have to pay it back. Simple as that...

    April 29, 2008 at 12:19 pm |
  34. Gary from Texas

    I feel bad for some of these people, but for every one like this, there are 6 that has taken advantage of all of this to the extent that it should be considered theft.
    I have personal experience with one such individual who is still receiving benefits from all this, and he has the nerve to complain that he is not getting what the government owes him.
    Come on,

    April 29, 2008 at 12:19 pm |
  35. Katy

    I find it very hard to believe they were "not allowed" to see their paperwork. That paperwork contains their personal information. No way could they not know what was on there or not have access to it. It might not have been available to them at the time the inspector was at their property because the info has to be uploaded into the computer system, but they definitely can get it. They probably just didn't ask or they were in on the scam. I worked in parts of Louisiana. I know of people who lived in shacks that weren't worth $50K but got $150,000 from Road Home and bought double wides with granite countertops and columned jacuzzis, yet they still have the condemned shack and are renting it out. Some of those people may be uneducated but they are certainly not stupid. They know how to get all they can get.

    April 29, 2008 at 12:19 pm |
  36. LB

    ....and people want the government in charge of their healthcare system?

    April 29, 2008 at 12:18 pm |
  37. vince

    Pretty typical of everything going on in the country. The innocent working people are paying for the wealthy governments mistakes. If it was the contractors fault make them pay the money back!!

    April 29, 2008 at 12:17 pm |
  38. Boston guy

    Again the Bush Administration hard at work doing what they do best!

    April 29, 2008 at 12:16 pm |
  39. Mark

    He needs to pay up. He is a burden to society.

    April 29, 2008 at 12:16 pm |
  40. Jessica

    How can they do that? Haven't these people suffered enough? Its not the people's fault the contractor overestimated. The state should just eat the cost. I mean these people are trying to get back on their feet they dont have money to give back to the state. And besides that, the country is in a recession which makes everyone's life difficult. How are they supposed to pay back the state and take care of themselves. This is outrageous. What does this say about our country? And what does Bush say to this? Nothing as expected... I can't wait till we get a new President! I hope he or she will have a better solution for this.

    April 29, 2008 at 12:15 pm |
  41. amy

    how awful.
    let them be – – call it a consolation prize, if you want to, but for goodness' sakes, let these people have some REST.

    April 29, 2008 at 12:15 pm |
  42. Dan

    Given the topography, people shouldn't be living there to begin with.

    April 29, 2008 at 12:14 pm |
  43. Steve

    I thought a grant was free, how can you say that one has to pay back anything. I can see if they LOANED the funds, but a grant is a grant.
    Look it up..

    April 29, 2008 at 12:13 pm |
  44. joel

    man, america's the greatest country in the world!



    it's embarrassing to know that something like this is going down. truly shameful.

    April 29, 2008 at 12:09 pm |
  45. Cindy

    Nothing surprises me anymore when it comes to NOLA and the ridiculous government that they have there!

    April 29, 2008 at 12:02 pm |
  46. Rahni, Connecticut

    The nightmare haven’t ended for the Katrina victims. Now it's a financial storm hurting the some 300 families regarding overpayments and repayment. What is going on with the systems that supposedly help these people?

    Rahni, Connecticut

    April 29, 2008 at 11:38 am |
  47. Jamie

    I worked in New Orleans for four months in 2006 with Campus Crusade for Christ, and then again in 2007. I love the city of New Orleans greatly. I love the people, I love the hope they have. And frankly, this whole situation is in no way surprising, but still sickening. I hope those people can get some sort of break one of these days. I have the same hope that this city can and will be restored and be alive again. I'm not giving up on that.

    April 29, 2008 at 11:22 am |
  48. Judy Stage Brooklyn MI

    I guess,if I did not see the paper work for the estimates and did not sign it as read or agreed upon, I would have to disagree that I owed them any money. My reading of the estimate would have gotten the facts of the estimate straight. The state gets to eat their mistakes for not catching "mistakes made all along", by the ICF in their process of estimating damage. There should have been checks and balances in place to assure accuracy. As usual the little guy gets screwed.
    I sure am happy that CNN keeps the light on the Hurricane Katrina tragedy, if for no other reason, than changes can be made at the state level to make it easier for people, rather than more difficult.

    April 29, 2008 at 11:01 am |
  49. Francie Hardy

    It is beyond me that a country could do that to it's own people.
    It makes you wonder just how ignorant we really are when it comes
    to our legal rights,in what is suppose to be our beloved country.
    It does sadden me that there just is'nt enough money,
    for these contastrofies. How does one ever prepare, especially
    the way the economy is. My hope is in God who somehow gets be through I

    April 29, 2008 at 11:01 am |
  50. Michelle

    Randi yet again you find another story that just
    amazes me. I am glad that Team 360 will be reporting
    form New Orleans tonight. In Suffolk a city in Hampton
    Roads, Virginia 3 monster tornadoes struck and left
    debris and destruction in it's aftermath. The area is
    usually known for hurricanes so this is a shock to
    a lot of people in the region. I am not a Suffolk
    resident but I know people who are and my thoughts
    and prayers are with them.

    April 29, 2008 at 11:00 am |
1 2 3 4 5 6 7 8 9 10 11 12 13