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. Leroy

    That is just sickening! Those people have been through so much and not only did they not get everything they were promised, but they still are not being treated fairly years later. The only way for this to go away is Bush must issue a presidential pardon and waive any judgments against them. That will just begin to repair the problems that he should have taken care of in the beginning.

    April 29, 2008 at 1:14 pm |
  2. Shari

    Don't get me wrong, I DO symphathize with the Katrina victims but when will it stop. If the state overpaid some of these victims, then they should pay it back. They should only receive what is due them to restore their home back to the way it was. In Monteguts case, if they gave him money to replace skylights that he didn't have in the first place, then he obviously should give the money back. I live in North LA and hear these stories every day. At some point, these victims must stand up for themselves and not rely on the government (or our tax dollars) for help.

    April 29, 2008 at 1:14 pm |
  3. Meki Mull

    Our government does nothing for the people now. Its more concerned about not affending anyone. But, I wish the Katrina 'victims' would get off there lazy butts and do something positive for a change.

    April 29, 2008 at 1:12 pm |
  4. The Hawk

    Weren't Mississippi and Alabama devistated by Katrina. Why do we hear nothing of their problems. Many in Louisiana are deserving of help. Many others shamed the state by their behavior. Unfortunately it is the images of those who acted like animals that stay with our mind's picture of Katrina.

    April 29, 2008 at 1:12 pm |
  5. Victor Bobier

    These people should not be billed for the excess money owed, ICF should pony up the money and pay for It considering they wouldn't allow the homeowner to even see the actual paperwork and yet later mad them sign their lives away, Here in California such tactics are illegal, Sounds like someone wanted to keep any excess money and make the people pay for It, even If they can't and that smells like fraud to Me.

    April 29, 2008 at 1:11 pm |
  6. Shel

    If my house burns down, gets flooded, etc, etc. and I don't have insurance then I am out of luck. I'm still baffled why all these people expect handouts with no strings.

    April 29, 2008 at 1:09 pm |
  7. Sammy

    this is what happens when dishonest people are hired to do a job and not properly supervised by honest people. When it comes to money, we can't turn a blind eye to people with dishonest genes going back generations.

    April 29, 2008 at 1:09 pm |
  8. Melissa

    I am a Katrina Victim that received a Road Home grant. We were told this year that we must add the grant to our income and pay federal taxes on it! Most of us owe between $10,000-$25,000 as it is. Now, I guess I'll be waiting for the state bill!! This is unbelievable! Where do they expect us to get the money from?? I think that they may end up putting leins on properties because we used our money to fix our houses!!!

    April 29, 2008 at 1:09 pm |
  9. elaine elmore

    If anyone has to pay back money to the U.S. government, it should be ICF International, not the homeowners.

    April 29, 2008 at 1:09 pm |
  10. Sammie

    >>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>>>

    To Jamie and all who helped... please accept my heartfelt thanks.

    April 29, 2008 at 1:09 pm |
  11. Chris

    Serves them right. So many people ripped off the government by claiming in excess of their actual damages. We as taxpayers are footing their fraud so I'm glad to see that the goverment is trying to at least recoup some of it...

    April 29, 2008 at 1:09 pm |
  12. Nick

    It seems to me that ICF should foot the bill. I have an Masters in Business Administration, and everything I've been taught tells me that ICF is at fault, not the resident. Since ICF provided no paperwork for the residents to confirm the assessment, why should the resident be held liable for an overpayment to which they were provided NO DETAIL. Poor administration on the part of ICF. I could understand the resident being liable for overpayment ONLY IF THEY WERE PROVIDED WITH AN ITEMIZED BILL FOR GRANT, otherwise ICF SHOULD BE HELD ACCOUNTABLE, NOT THE CITIZENS. Step up to the plate ICF, you made the mistake, not the residents!

    April 29, 2008 at 1:09 pm |
  13. Jessica

    What a mess.

    But....who signs paperwork without reading it? Who allows this process to even continue without being able to see their contract? And Mongetut wasn't allowed to see the claim?

    Come on! If something shifty was going on, these people should have reported it THEN!!!

    You don't sign a contract if you don't read it or understand it. Sorry but I don't feel sorry for them. It's time people take responsibility for their actions. It's how many of these people got into this mess in the first place–not having insurance or not having enough. Life is rough, we all have to work hard for the things we want and need, we cannot depend on others to do for us.

    The ongoing irresponsibility on the part of the government AND individuals that costs the hardworking American taxpayers money is starting to tick us off!

    April 29, 2008 at 1:09 pm |
  14. CJ

    And here we have just another example of The Goverment doing so much better than the private sector that we want the same system to be in charge of our Health Care! Think about it the next time you hear about Universal Health Care, do you want the same system that doesn't know how many skylights you have, and then wants money back in charge of your medical care? Just a thought.

    April 29, 2008 at 1:09 pm |
  15. Kyle, NY

    They should pay, why should we re-imburse all these people to rebuild in a high risk prone area for natural disasters. Can't we learn from the first hurrican.. MOVE OUT OF THE CITY!

    April 29, 2008 at 1:09 pm |
  16. Scrooge

    Sensationalized and overstated:
    In two paragraphs the TWO MILLION DOLLAR headline drops to 1,750,000. If the 250,000 differnce is not imporant, then send me a check for $250,000.
    Next, this 1,750,000 is owed by a whopping 2,000 families: Or on the average, each family owed back $875. Sure these people don't deserve this treatment, but $875 per family is not as sensational as *NEARLY TWO MILLION DOLLARS*.
    Then, some families may owe $150,000 EACH! If so, there are only 11 such families – again not as sensational as the headlines.

    You asked what I think: Tell JOHN to pay back the $13,000 of the $20,000 gift he received. There is no free lunch.

    April 29, 2008 at 1:08 pm |
  17. Alfred Schmit

    I imagine that it has occurred more often than not, that the homeowners used extra money for non-home building expenses and are now "shocked" that they have reimburse some money –when they clearly read that probability before being given the money.
    I think that –nobody– (from the federal government, to the state government, to the local government, to the contractor and finally to the residents) should hold their heads high.

    April 29, 2008 at 1:08 pm |
  18. Todd

    At what point did the federal government become the saviours of the people who knowingly live in an area that is known to flood if hit by a hurricane. My tax money is not ment for that purpose, yet billions were spent. Yes it is sad, but a great deal of this suffering is self inflected. FLOOD INSURANCE, get it or lose everything. If you can't afford it move away from areas known to flood. If you don't move and don't get insurance then you risk losing everything and it will be YOUR OWN FAULT. New Orleans WILL flood again. This is not an it could, or it might, it is an absolute.

    April 29, 2008 at 1:08 pm |
  19. Michael M. Noonan

    I live in New Orleans. Yes, Cindi, I have many disagreements with our local government. We tried to rectify them by getting rid of our Democratic governor and mayor. We only succeeded with the governor. When we get rid of the mayor and all of the hangers on from the corrupt Morial administration, we'll do better. Now, in what charming city do you live, sweetheart?

    April 29, 2008 at 1:08 pm |
  20. David, Lansford PA

    I think it's absolutely discusting...As if anyone has that kind of money, let alone the residents of New Orleans who spent every penny they have. Much like it is with our troops over sees.. The Government can take care of everyone else in this world but they can't take care of our own..

    April 29, 2008 at 1:07 pm |
  21. Kim S.

    If I was not allowed to read the inspector's claim before submission, there is no way in hell I would repay one penny !
    The State should absorb the cost.

    April 29, 2008 at 1:07 pm |
  22. Dillon

    Wow, just stupid can our goverment be, this story goes to show that so far we have found no bounds.
    After such a horrible tragedy they "get crutches to help them stand again, they later have to pay for the nice rubber stoppers on the bottom and some pillows that keep the crutches from rubbing the skin from under their arms; when all they really wanted was the crutches.

    April 29, 2008 at 1:06 pm |
  23. Phil Smith

    Stories like this disgust me. Where is the efficiency, integrity, compassion and honor? Is it possible that the government is the greatest enemy of the American people? I think it is.

    April 29, 2008 at 1:06 pm |
  24. Arthur, Ohio

    As long as there is an appropriate payment plan, although it's tough-luck for many families, essentially they got a decent loan. Personally, I believe loans should have been the only way money was to be issued by the federal government. The federal government should not be providing handouts to those who, though lack of foresight, were unprepared for a natural disaster. Instead, the federal government should provide relief loans to supplement funds that the state is handing out. This mentality that our big-brother federal government should be there to bail us out of any situation sickens me. Leave that up to the individual states to handle, let the federal government shrink so that those who have the foresight to live in less risky environments are not having to pay for those without foresight.

    April 29, 2008 at 1:06 pm |
  25. Paul

    I'm sick and tired of everybody saying the little guy gets screwed again. Us tax payers are bailing them out by giving them FREE money in the form of grants because they were to cheap to buy hurricane insurance in a hurricane prone area! If they had done the responsible thing in the first place...buying insurance like they should have, then this would all be academic! So stop feeling sorry for the lazy cheap people who brought this on themselves. They wanted to save money by forgoing insurance and should not expect tax payers to bail them out...and when we do give them free money stop complaining that they did not get EXTRA free money above and beyond what their loses were!!!

    April 29, 2008 at 1:05 pm |
  26. Bill (Slidell)


    I had Flood and Roof damage to my home from Katrina. I don't live in a flood plain but I purchased both a flood policy and Homeowners with wind & hail damage insurance. Excluding reasonable depreciation on the flood damage insurance policy and about $5K in deductibles on both policies, my insurance company took care of me. However, my Homeowners policy soared from $1,000 a year to $3,000 a year.

    My initial understanding was Road Home would be for people to get back into their homes and take measures that will prevent and/or minimize flood damage from a similar situation. For example, leveling off the land with a lot of dirt, stronger window protection, etc...

    I waited three years before we finally saw a representative who was at my home two months ago to do an inspection. He took a picture of me and him in front of my home before he inspected my home which was pretty much completely repaired. I told him I had my insurance reports showing everything I was paid for and everything I did not get paid for. I explained to him I had two appraisals on my home from a certified appraiser of the cost of my home the day before the storm and the days after the storm that involved the damages etc....

    He did not want to see any of it and could care less. We discussed the reason fror the Road Home Assistance, which made no sense to me. He said it did not matter if you received insurance. He said it was strictly related to the flood damage. He said if you did not have any flood insurance, there was a penalty factor in the formula they use so you would get less money. I asked if you give me too much will I have to pay it back later. He said I won't have to worry about that, it won't happen. I have not received a dime from them and quite frankly I don't want a dime from them.

    I feel sorry for folks who had no insurance because they could not afford it. I don't think the government should be bailing us out because we are too stupid not to pay for insurance. They can always get something back from Casualty and Theft in their income tax, if they paid taxes.

    I think the Road Home Insurance would have been better used for repairing the roads and drainage ditches in all those communities. I also think a Federal Government Agency rather then a State Agency should have monitored who got the contracts and followed up on the progress more closely. My home is repaired from my insurance company, but nothing has been done to repair the roads in front of my home or clean out the drainage ditches. Louisian is such a corrupt state where the state and local politicians and local contractors are related or such friends that the average tax payers are screwed.

    Notice the problems did not get discovered until a few months after Bobby Jindal took office. I am surprised he has not been done away with by now. Keep up the good work Bobby, you will get the help you need to put these corrupt politicians and contractors in Jail.

    By the way Randy, ICF gets a percentage on the amount of each claim. So it is to their best interest to run up the cost. Shame they had to commit fraud to do it.

    The folks that were overpaid should seek legal council, they are not legally competent to realize what they were signing. ICF was definitely aware of what was going on.


    April 29, 2008 at 1:05 pm |
  27. Jim

    This was an impossible task. I live just 30 minutes North of New Orleans and I've witnessed it all. I've seen people get money and use it to go buy boats and TV's instead of fixing his house, I've seen people who were offered money who didn't need it and people who needed it and weren't offered it. I've even seen someone who was given the $2000 for evacuating who didn't even want it and when they tried to return it they were refused!!! Some of these people are getting screwed, but don't think for a minute all of them are, some knew they didn't deserve all that money.

    April 29, 2008 at 1:04 pm |
  28. NOLA Stacey

    Thank you to those of you who sincerely pray for us and wish us well. It is very comforting to read comments from nice people (you'd be amazed at some of the vile, accusatory and downright mean spirited comments posted on "Katrina" related stories). The "Road Home" program and the ICF are big jokes! There definately needs to be an audit of accounting practices. My sister's "Road Home" grant was not enough to finish her renovations, she managed to get about 1/2 of the work completed before running out of grant funds). She is appealing her "award" (can you believe they actually refer to it as an award?!) and has not returned home yet (no appeal date has been scheduled yet). She lives out of state and desperately wants to come home; I miss her and want her home for that matter. Regarding ICF requiring those who were "overpaid" to return the money, I'm disgusted. ICF stance that homeowners signed documents stating that they would repay if an overpayment was discovered is foolish. The ICF grant was supposed to get homeowner back into their homes in a "similiar" state as before the hurricane. How many homeowners do you know, in any part of the county, just sitting on 13K waiting for the gov't to ask for it back??? My personal opinion: Homeowner should be allowed to keep what was "mistakenly" given to them and those, like my sister, deserve a fair an impartial appeal process. This is a very sensitive subject for me and my eyes are welling up with tears now! When is enough enough? How many blows can a people take? How many times do you make a person feel unworthy?

    April 29, 2008 at 1:04 pm |
  29. Katrina Survivor

    I am a New Orleans resident that fought with FEMA, my insurance company, and ICF for money to fix my house. FEMA denied me, my private insurance company underpaid me, and ICF denied me due to the pre-storm value of my house. Nevermind the fact that post-storm rehabilitation costs (and insurance costs) are triple the cost prior to Katrina. The nightmare never ends!

    In the meantime, this rotten contractor hired to run the program just received a $156 million raise for their incompetence, and we're expected to pay for their mistakes. Not only are they expecting people to pay for what they put us through hell and back to receive, Road Home recipients are also facing huge tax bills because the IRS has determined that the grants are considered taxable income. Cry me a high river!!!!

    Katrina Survivor-New Orleans

    April 29, 2008 at 1:04 pm |
  30. Jack

    Don’t want to sound intensive but... they should not have received my tax dollars anyway. That is what insurance is for. If I want to be generous I will cut a check, I don’t need government mis-managing my tax money for me. The government’s only responsibility should be to fix the public works and repair public property.

    April 29, 2008 at 1:03 pm |
  31. Frank

    Wait...$1.75 million spread over 5,000 families is only $350 each. Someone should be fired somewhere for overestimating the payments, but this story makes it seem like every family is going to be billed tens of thousands of dollars.

    April 29, 2008 at 1:03 pm |
  32. Jay

    If the company or government made the mistake, they should pay the tab. If ICF was to blame, let them pay it back. If it was a government issue, let the state suck it up. I believe the auditing should have occured while the money was being distribted, then they would have caught this early on and not have to burden the families at this point.

    April 29, 2008 at 1:02 pm |
  33. Annie

    Unfortunately, the state is not the only ones going after those who were so traumatized by Katrina. FEMA is also pursuing repayments from people who sought and accepted initial payments because they were told they were eligible. Now FEMA has decided they were not – and they want the money back. When will it end?

    April 29, 2008 at 1:02 pm |
  34. TE Terry

    It is unfortunate, ridiculous, and sad that the individuals hired to estimate the cost and repair of damaged homes could not effectively meet their MOST important job requirement! Pretty disgusting. I am sorry for you New Orleans. You do not deserve this.

    April 29, 2008 at 1:01 pm |
  35. Brian

    You know, I'm against the government bailing out these homeowners at all. All of the homes that I've owned, I've paid insurance premiums to cover any catastrophic losses. So, I took action to protect my investment – why should I be required to bail out those who decided they'd rather keep their money than buy insurance? No sympathy for these folks, sorry.

    April 29, 2008 at 1:01 pm |
  36. Sandy Stewart

    It's unbelievable! I just ended a relationship with my fiance who resides in new Orleans because I would not agree to relocate to NO. The area is so dismal and gloomy i couldn't see myself living there. After all these years NO still look s like death zone. Outside of the French Quarters everything else is still a mess. It's amazing how these people have been treated through no fault of their own. Something must be done about this war that is draining the life out of this economy, hard working americans with sons and daughters in the millitary are suffering more than we will ever know.

    April 29, 2008 at 1:00 pm |
  37. Laurie

    How about all the aide our country sends over seas.....why don't we ask for reimbursements from them. I think its time we start focusing on taking care of our own people for a change.

    April 29, 2008 at 12:59 pm |
  38. steve

    err, it sounds like it was free money redistributed to them from the taxpayers in the rest of the country who live above sea level to rebuild his house right back in a disaster zone. why should we feel sad? is it possible, as one reader stated, to get "screwed" out of free money?

    and if they were overpaid, they were OVERpaid, right?
    if my employer accidentally gave me a paycheck with an extra 10,000 dollars in it, i would not expect to get to keep that money.

    anyways, why are we rebuilding anything in new orleans? so we can pretend to be shocked when the next hurricane comes?

    April 29, 2008 at 12:59 pm |
  39. Concerned

    If ICF made the mistake why don't they pay for it? Why is it when you are drowning the government finds away to make sure you are really drowning. This is crazy how are these people suppose to know they where being over paid? they used the money for what it was intended for. I am praying for these family God works in misterious ways.

    April 29, 2008 at 12:59 pm |
  40. Mike Butera

    Another government give-a-way program gone astray. Another scam by the under class who saw a way to get some walking-around-money. How do you fix a shack? Once on once the dole, always on the dole. We (U.S. government) created these dependents and perpetuate them by these assistence programs. We want these people to vote Democrat. And by the way, its all George Bush's fault anyway.

    April 29, 2008 at 12:59 pm |
  41. Mike

    State is doing a very bad job of granting people money. Some people are getting way far less and I have examples of few who got a lot after getting the money from insurances. A guy I know bought his house for 100K before couple of years. Got that money back from Insurance, plus got some from Homeowners also, and also money for contents. He only spend 50-60K to fix his house. Then he gets subsided loan from SBA. Then he gets letter from LRA that they are going to award him 50,000, he is one of the happiest, he goes to closing, they told him to sign on paper which gives him 100K and after few days he gets 100K, so lots of free money for some people who already got lot and some dont get any. This is Louisiana Recovery Authority.

    April 29, 2008 at 12:59 pm |
  42. Jason

    While I feel for those who lost their homes/possessions in the storm, one has to realise that the money they are being asked to back was not rightfully theirs. It is also taxpayer money and the whole country has shared in the burden of paying for the rebuilding of an area that is not near where we live. No government agency offered to help fund the rebuilding efforts any time my familie's properties have been damaged by the weather (Hurricane HUGO and when a tree fell our house). We had to rebuild ourselves with no assistance from the FED.

    April 29, 2008 at 12:58 pm |
  43. Tim S

    It ultimately falls on the homeowner. You signed a contract, just like a mortgage. Now look at all the foreclosures. Its these dumb people who dont read what they sign that ruins it for everyone else. If i cant read what i sign i dont sign it! No excuses. You dont get 20k or 150k for nothing. Read read read!

    April 29, 2008 at 12:58 pm |
  44. Snoopy

    Everyone was angry the state couldnt get the money out quick enough. So, now after they tried to give it out faster, people are angry because they make mistakes. I must agree with the state on this one. You have to draw the line and stop giving in to those sad kitty eyes... <:3

    April 29, 2008 at 12:56 pm |
  45. Robert

    My home in mississippi was nearly destroyed by katrina. First of all, the folks in new orleans should have had enough sense to not spend more money than their entire house was worth originally on repairs. Second of all, how about New Orleans uses its hands to pull itself up instead of just sticking them out for handouts. The 9th ward was a dangerous dump before the storm.


    April 29, 2008 at 12:56 pm |
  46. Rick

    I have friends that lived in south Louisiana and lost everything. They have heard promise after promise about how the gov't will help them rebuild thier homes and the city. But as usual, it is the same ole political propagandy used by the legislators to temporarily pull the wool over thier constiuents eyes so they can get what they need from the people they are supposed to represent. Why not hold ICF accountable for the inflated estimates that thier people turned into the gov't. I am sure they were paid quit a some of money to conduct these estimates. It is not the fault of the people that live in N.O. that are trying to re-establish thier lives that yet another predator feeding off of others misfortune took advantage of the situation at hand. How about our gov't leaders finally take a stand on this issue and hold accountable those who are truly at fault.

    April 29, 2008 at 12:56 pm |
  47. Abra

    It seems that Big Money Interests make mistakes all the time and it's always the consumer who pays for them. Is it right? No! However it is the Republican way. To correct this problem, we need a Democratic majority in both the House and Senet so that Congress can uphold the laws on the books and inact new laws to compensate for the Republican excesses.

    April 29, 2008 at 12:56 pm |
  48. Dan-Miffed

    Why in the hell is everyone responsible for everything except the state?
    Did the person that was responsible for hiring the estimator get fired?
    If not, he should have been. Is there a process for getting a refund back from the unqualified estimator? Someone who evidently did not do the job he was hired to do? He made the mistakes, and he should pay. Attempting to expect refunds from the homeowners is so unconscienceable. No wonder the state is still in the same mess it was in a year or more ago.

    April 29, 2008 at 12:55 pm |
  49. Eric

    I don't understand why these people received money from the government to begin with. I have always had to have insurance on my house. If my house go hit by a tornado or burnt down I can fully assume that nobody other than my insurance company will rebuild my home.

    April 29, 2008 at 12:54 pm |
  50. Dick B

    Isn't it amazing that we are requiring citizens of New Orleans to repay $2.0 million, when billions have been lost or embezzled in Iraq and nobody is being asked for repayment there!

    April 29, 2008 at 12:54 pm |
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