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. Todd

    This is the story as I see it....A person lives in a flood zone. This person does not purchase flood insurance. It floods and destroys, ruins, cause all sort of kaos. Now this person wants and gets FREE money. The company giving out the free money appearently like all other companies, hired the least talented, thus the cheapest, to help distribute this free money. The company makes several mistakes handing out the free money. Now the state overview committee determines there were mistakes, errors and people not reading what they were signing. Who's fault..........It is the person who started this process. THE HOME OWNER.
    You are not entilted to free money. You took a chance not getting flood insurance and you LOST. You lost big time. It is sad and I wished your home did not flood, but it did This person took another chance signing paper work he did not read. Now this chance turned and bit him also. How many chances is this person going to take before he assumes responsiblity for his actions. We the people are not here to fix your mistakes or give you a free ride. PAY BACK THE MONEY!

    April 29, 2008 at 2:22 pm |
  2. Karin

    Personally, I am so tired of hearing about Katrina victims...what about all the people that were afffected by the 2004 and 2005 hurricanes...they got nothing but a few hundred dollars from FEMA to help with food and maybe a trailer to live in while they tried to work things out with their insurance company. Those that didn't have insurance were on their own also. Folks supported each other emotionally and labor wise to re-build and it took a while....It seems that you get so much more if you have nothing in this country......those that lost their jobs found new ones, they didn't complain they just did it. I feel bad for so many who handled themselves well after Katrina, but not for the mass that had nothing, did nothing but still expected everyone to help them.

    Lets talk about California and the wild fires the mud slides the tornadoes that destroy cities....they are in the news and them out as old news.....Enough already!

    April 29, 2008 at 2:22 pm |
  3. Joe

    Who do you think pays if the homeowners don't??? TAXPAYERS! It was an overpayment folks – the recipient should absolutely REPAY!!! DUH!

    April 29, 2008 at 2:21 pm |
  4. Bob, Texas

    Sounds like they should fine ICF about TWO million dollars and leave the homeowners alone.

    April 29, 2008 at 2:21 pm |
  5. mike

    About 40% of my family did live there, and after this have no plan to return! On the subject of levee ever one that live there for a long time knew those levee were bad, just no one took the step to do something about it. New Orleans is still awful in some areas. and the repeated slap in the face while your down just don't stop! We all know government, intelligence, USA don't even make sense

    April 29, 2008 at 2:21 pm |
  6. erin

    I think that pretty much anytime you receive an overpayment from the government you have to pay it back, no matter whose fault it is, right? I am not saying that this is okay or doesn't totally suck, but doesn't the same hold true for food stamps, social security benefits, tax refunds, etc? I guess with tax refunds you are allowed to see your paperwork, but with the other programs you are not either, but if you get overpaid, you are expected to pay it back no matter whose fault it is. I guess that's why they have you sign the contract that you will pay back overpayments, so you know the risk. That does really bite though.

    April 29, 2008 at 2:21 pm |
  7. Gina

    I was a law student in New Orleans when Katrina struck. I evacuated like most other citizens and received the standard $2000 check from FEMA. A year later I was told that I owed the $2000 back. The battle with FEMA to even understand their rationale in seeking repayment was incredibly frustrating. As a person trained in the law, I could not fight through the levels of employees that are untrained and give conflicting information. Eventually, I just paid the money back. After this ordeal, I wonder how any person, with a legal degree or not, can manage to stand up for their rights in our current system.

    April 29, 2008 at 2:20 pm |
  8. Billie Hoskins

    There is no need to make these people suffer any more. Let them keep the overpayment.

    April 29, 2008 at 2:20 pm |
  9. Brian

    Wow! Let's turn the knife in the back just a little bit more, right? Put yourself in their shoes for just once. How would you feel? I would hope the folks affected by this 'mistake' can find legal counsel to help with this. I would be willing to bet that a good lawyer could fight the fact that the residents should not be held accountable since they were not allowed to see the final assessment. How can we have such an endless budget for international 'assistance', yet nit-pick these 'victims' of such a devastating storm here at home? Putting all the red tape and politics aside, can't someone just use common sense and compassion and for once DO THE RIGHT THING? How do these people in charge sleep at night? It's amazing.

    April 29, 2008 at 2:20 pm |
  10. Joe

    The same thing happened with FEMA. I moved to New Orleans nine days before Katrina and received the initial grant money ($2000) which I used on food, clothing, and other essentials while I was displaced in Florida. Now FEMA wants their money back saying that because I hadn't lived in New Orleans for six months prior to the storm I wasn't eligible in the first place.

    I don't know about you, but it's never taken me six months to relocate to a new city.

    The state and federal governments have failed this city and its people in a big way.

    April 29, 2008 at 2:19 pm |
  11. Frank

    What I want to know is how do you sign paperwork that you are not allowed to see? Did they blindfold him and guide his hand to the appropriate place to sign? OF COURSE he is going to say he wasn't allowed to see the paperwork – he doesn't want to follow the rules that he himself agreed to! This is the same thing that is happening with the mortgage crisis – people signed all kinds of agreements that they didn't bother to take the time to fully understand, and then cry foul when the time comes to honor those agreements. And the taxpayer is expected to come to the rescue and bail these folks out. I agree that what happened to the folks in New Orleans was a tragedy, but for heaven's sake, before you sign your name to something, please have the personal responsibility to read and understand it first!

    April 29, 2008 at 2:19 pm |
  12. KAREN

    I had a tragedy years ago and lost everything to my name within 2 hours. The tragedy was a house fire and we had no insurance at all. The community helped with clothes and such but the rest was up to us. We recieved no grants or loans from the government. We rebuilt our home as we made the money and it took us almost 4 years to complete. You can not overcome a tragedy overnight. My heart does go out for the people of New Orleans but remember they do live in the State of Louisiana. If Louisiana could have a middle name it would be "Corruption". I should know, I have lived in Louisiana all of my life. I feel the ths state should take on part of the repayment since the families had no control in this.

    April 29, 2008 at 2:19 pm |
  13. My bank

    At my bank I'm given 60 days to dispute any inaccurate items. In this case the state took longer then 60 days to catch their mistakes. To bad and too sad. ICF should eat their error.

    April 29, 2008 at 2:19 pm |
  14. Sandi

    This is terrible. It really shows how much our government is actually willing to help the American People. They will jump thru hoops to help other countries and immigrants, but not American Citizens. Sickening.

    April 29, 2008 at 2:18 pm |
  15. Charles Fidlar

    So the contractors overestimated and too much grant money based on the inaccurate estimates went out. It's a pity. The estimators should be held responsible.
    Bush could step in and indemnify the homeowners but that's a long shot.

    April 29, 2008 at 2:18 pm |
  16. Judy in Minneapolis

    When are the State of Louisiana and all other agencies involved in the Katrina fiasco going to stop visiting additional pain and suffering upon the unfortunate residents of New Orleans? How many disastrous screw-ups with consequences only for local residents before someone in charge takes charge and stops the madness? This situation is an ongoing national disgrace and is worthy of a Peter Finch "Network" moment. People of New Orleans, throw open your windows and shout "we are mad as hell and we are not going to take this any more".

    April 29, 2008 at 2:17 pm |
  17. Liz

    First of all, read "The Great Deluge" and you will be stunned at what went on (or didn't go on) surrounding Hurricane Katrina.
    Secondly, I've recently been to New Orleans myself, and toured several areas including the Ninth Ward. Some places are working to reconstsruct their neighborhoods and some just don't seem to care. It galls me to see the FEMA issued house trailers parked next to some STILL water damaged houses where there is NO reconstruction going on 3 years after the hurricane hit. It is obvious many people are now content to just live in these FEMA trailers and let their house fall down next to them (I'm sure the neighbors who have repaired their homes love these dumps with 2 ft. high weeds next to them.) What galls me even more are the expensive SUV's or luxury cars parked next to the trailers.
    I know a lot of people needed help and were honest and fair about what they needed. But the taxpayers of this country have also gotten taken by a LOT of people who are just scamming the system.

    April 29, 2008 at 2:16 pm |
  18. Esther

    Since when did a grant turn into a bill-me-later? Absolutely not. These people should not have to pay a dime. By no means should anyone ever have to pay back a grant, nor should anyone ever expect to receive a bill for grant money. The contractors did not spend enough time inspecting the houses. How is that the fault of the homeowners?

    This idea scares me. Imagine if the government starts taking back other grants it considers to be overestimated. Sorry- your education was worth less than we thought. Here's a bill!

    The contractors are the ones who overestimated. They were paid by the government. The families living in these houses had no control over how much money they'd receive. The government needs to settle this issue with the contractors. . . not the people living in these houses!!!

    April 29, 2008 at 2:14 pm |
  19. Jimmy

    I agree with the State. God Forbid some of these people that received the checks verify they received the correct amount before spending the money. I would be curious to see how much money was blown on a bunch of crap they didn't need. It's so easy to blame the government for things. The problem with this country is NOT the Government, its accountability!! Take responsibility for yourself for a change and STOP BLAMING SOMEONE ELSE!!!

    April 29, 2008 at 2:14 pm |
  20. A.K.

    Is there any way these people are going to be helped (in actuality this time)?

    April 29, 2008 at 2:13 pm |
  21. Deb from Texas

    This is pretty simple to me: ICF made the mistake, ICF pays for the mistake. These dear, tragic Louisianans should not have to pay back any money to the government. Trying to find a scapegoat for this malady is a fool's errand. But holding innocent people responsible for devastating amounts (legal or not) is positively inhumane at this point. I could understand 1 or 2 cases, but over 300?!?! If more companies had to live up to their inadequacies, this country might have a chance to heal itself.

    April 29, 2008 at 2:13 pm |
  22. therealist

    Katrina missed New Orleans by a mile. This disaster was caused by man made levees failing prematurely due to decades of neglect.

    When a real category5 hurricane hits New Orleans, and it's going to happen, a twenty foot wall of water will shoot right down Bourbon street and engulf the whole city. Even the great and mighty liberals in Washington will be able to do nothing but watch in horror as the un-listening drown in their bitterness.

    Makes me wonder why New Orleans even has an emergency plan, with disaster drills, to begin with...

    April 29, 2008 at 2:13 pm |
  23. just Steve

    Based soley on what you reported, and without the benefit of ICF's version. I can only speculate that if indeed ICF did error, then they and they alone are responsible. Their escape clause,( overpayment is later discoved, whether/not their-ICF- error), is unconscionable! There would be no overestimates if the job was done right the first time. there are no excuses! If Fraud was commited on ICF's part, then ICF should be held accountable, not their intended victims,(the suvivors of Katrina.
    This is just another example of a Broken goverment!

    April 29, 2008 at 2:13 pm |
  24. Christina

    You have got to be kidding !! This outreageuos. ICF Should be 100% responsible for this sitiuatation. They are the ones who made the mistake not the homeowner . ICf is the suppposed expert in this,I understand the families signes saying they would held responsible for errors but This company certainly took advantage of these people in NOLA. WAKE UP AMERICA and read the fine print dont trust GOVERMENT contractors insist on looking at the paper work.

    April 29, 2008 at 2:13 pm |
  25. Julie

    What AMAZES me the most is that we can spend billions of dollars on a war and rebuilding other countries but yet we leave our own behind in the dust...it's sick, sad, and WRONG! Charity starts at home...why should victims be responsible for a government that failed them? We can send all this money to ther places, why not send it here, let the govenment pay for their own mess!

    April 29, 2008 at 2:13 pm |
  26. Megan from Washington

    My faith in my government to make the right choices continues to be eroded. It seems to me that the only way that the people of New Orleans are being helped is through individuals and non-profits. When will our government wake up and realize they are failing us.

    April 29, 2008 at 2:11 pm |
  27. JERRY


    April 29, 2008 at 2:11 pm |
  28. Al

    Not amazing at all, but if anyone needs to pay up it should be ICF specially if they were padding their estimates with false damages.

    April 29, 2008 at 2:11 pm |
  29. Ken

    This is a black eye on the state, the citizens, and above all the media. Disaster victims have historically come up on the short side in situations like this and it is no surprise to me that there is now a blurb about repayments. While I am sympathetic for the citizens who do not know any better, I hardly give kudos to the media for carrying on with a new subject that gathers more attention. I suggest reporting on something that is actually conclusive. This blog is either for praise or publicity for the common American to stand up and flood state and federal governments with electronic petitions. The government would have more than likely overthrown this issue out as soon as the victims stood their ground.

    April 29, 2008 at 2:10 pm |
  30. Brenda, New Jersey

    The constant news regarding the poor state of affairs continuing to cripple the taxpayers in our country is so disheartening. A country so capable of great things is ridden with irresponsible and careless lawmakers who continue to line their own pockets while others go hungry, sick and homeless. It's got to be so exasperating for the people of NOLA. It is for me and was not effected.

    April 29, 2008 at 2:10 pm |
  31. Trevor Doyle

    Insult Upon Injury. Take it out of Michael Chertoff and Michael Brown's skins – I say! The Gall! These DHS & FEMA clowns got away with a lot and not the victims have to pay ? No Way! Take it out of the Military and their subcontractors that's sucked Billions too much for Iraq contracts while Katrina raged!

    April 29, 2008 at 2:10 pm |
  32. Bill

    How much did the CEO and executives of this company make? I would think their pay was overestimated too. Let's see if they will pay anything back!

    April 29, 2008 at 2:09 pm |
  33. Angela

    New Orleans is not the only community hurting...the overpayment they got is what Biloxi, Ms. never got...to see fema communitys, and homeless people disgusts me...rent went up in insane levels, now gas, the government is a JOKE

    April 29, 2008 at 2:09 pm |
  34. Perilous

    Because this administration can spend literal billions on an illegal war, but can't afford to absorb a pittance like $2 million dollars to victims of a city completely devastated through that same administration's utter incompetence?

    How far does it have to go before we finally rise up and STOP THIS? WHAT have the American people become, that we allow this to continue? Haven't we already paid in enough blood and sweat and tears and pain for this administration's egregious and outrageous conduct and greed?


    April 29, 2008 at 2:08 pm |
  35. Jake

    This is absolutely horrible.... we are forcing american people that were devistated by a natural disaster, who in the wake of tragedy were treated like third rate citizens, to pay back federal dollars after everything they've been through. All because of some shady IFC operation, used by our government, that probably abused the situation on purpose to turn larger profits. In the meantime we send billions of dollars to Iraq to help rebuild. Which, Iraq has seen a sharp increase in GNP because of oil sales (hmmm I wonder?!?) and has not contributed a cent to their own rebuilding. Sometimes you just want to puke. Everybody gives the Rev. Wright a hard time for not being patriotic.... but seriously how is "our government" (and I say that very loosely) being patriotic here???? "Dissent is the highest form of patriotism" -Thomas Jefferson

    April 29, 2008 at 2:08 pm |
  36. karen schiavone

    If ICF made the mistake – they are the ones who should be billed. I bet they were not living in trailers......

    April 29, 2008 at 2:08 pm |
  37. RenaP

    welcome to America!

    April 29, 2008 at 2:08 pm |
  38. Elizabeth

    Since grant money is really tax money and these people were and are still taxpayers what they really got was some of their own money.

    As I see it, if we can spend billions evey month on foreign interests and foreign aid, we should somehow be able to find the money to aid and address the domestic interest of our people first. What our government has done and continues to do not just to the people of Louisianna but to so many other affected areas of our country when something like this happens is no different than leaving the money on the nightstand so to speak.

    The contractor that the government hired should not only have to pay a fine but also be responsible for restitution, (they write it off as a loss on their taxes anyway).

    The government on the other hand should be held accountable to the people of Louisianna for yet another bungled mess created by the policies and performance (or lack thereof) of the current administration.

    April 29, 2008 at 2:07 pm |
  39. A.K. Portland

    Let the State of Lousiana cover the mistakes the feds and ICF made.
    Maybe next time they will be more careful.

    As long as they can pass the buck, they and the department heads who blindly approve these oversights will never take accountablity.

    Nor will they be fired for being incompetent.

    As for the inspectors, they should immediately pull their licenses, and
    charge them with fraud.

    As for the Fema, and the idiots running the Katrina cleanup.
    The entire program is flawed. And, like the IRS is over extended
    with no cash flow to back it up.

    As a tax payer, I am exhausted paying taxes for programs, wars and
    faulty ideals that no longer serve Americans.

    If the Bush adminstration had spent the money rebuilding America instead of IRAQ, can you image where we would be as a Nation.

    Educated and safe.

    Not now, not for a long time...We are nearly broke.
    And, its because we are always in a reactionary state of thinking.
    We need to operate from a state of Action...

    I am sorry for the Families in Katrina.

    I just hope no looses their homes to taxes or fines after all of this.

    April 29, 2008 at 2:06 pm |
  40. Emily

    Wow, when I saw the title I was shocked. I feel so bad for people in New Orleans. =[

    April 29, 2008 at 2:06 pm |
  41. Casey

    This is absolutely ridiculous. If someone should not have gotten a certain amount, then why should they not be expected to give it back? People are forgetting that this program was designed to help people by giving away money – taxpayer’s money. This program is not an entitlement. If you gave the cashier at the grocery store a $20 bill and thought you handed them a $5, you’d expect your overpayment back when you realized it. And you’d have reason to.

    April 29, 2008 at 2:06 pm |
  42. Dave

    Ever notice that the government is more eager and insistent about getting money back than it is to get it out? The victims should hang onto it for about three years, delay and be ignorant, then give back only a fraction of what is owed.

    It is what politics has taught us to do.

    April 29, 2008 at 2:06 pm |
  43. CrescentCityRay

    ICF gets paid to make mistakes and then also gets paid to correct mistakes. For ICF, mistakes are a win-win. The more mistakes they make the more they earn. I wish they would spend as much effort identifying and correcting mistakes to the disadvantage of grant recipients as they do the over payments.

    The way the Road Home Program has handled our elderly and disabled rises to the level of a crime against humanity.

    Yes, New Orleans' homeowner families feel 'entitled' to these grants. The US Army Corps of Engineers designed and built our levees, which were maintained just fine by locals, and these levees fell down like movie props without even being overtopped. Our losses were caused by the federal government. we should at least get help to get back into our homes.

    April 29, 2008 at 2:06 pm |
  44. John

    It is clear what should occur. ICF should pay not only fines but the amounts in overpayment (2 million) plus the cost of reinspection...period. Homeowners have already spent the money in good faith. It is obvious that the grant money would not cover all the costs...so the homeowners are tapped. That's not to mention the devaluing of their homes they have had to endure due to the housing crunch, dollar devaluation, and property value decline due to total devaluation of the New Orleans community due to the damage.

    Taxpayers should also not be held responsible for another poor choice of contract assignment by the Fed. Why is it that our government insists on always going easy on the corporations perpetrating the damage and instead take it out on the american people. Case in point....housing crunch. The banks get bailed out by the Fed with the Gov's blessing while homeowners lose their homes and the taxpayer is footing the bill through national debt and huge dollar devaluation through inflated money supply.

    This trend has to change...

    April 29, 2008 at 2:05 pm |
  45. Red

    Meanwhile roughly $12 billion dollars is being spent every month in Iraq. Where the priorities at? I suppose people are like eggs in the eyes of the government as the break a few to "make a cake."

    April 29, 2008 at 2:05 pm |
  46. karen

    Does anyone smell a skunk in this whole thing. These people where in a desperate place. They would have sold their souls to the devil, to get back in their home or have anyplace for their children to stay other then the street. For them to even put such a clause in the contract to begin with leads me to believe that there intentions where to not only defraud the state but the people that qualified for assistance. I will loan you 15,000 dollars to fix your home but you will have to pay me back, 13,000 of it. Sounds shady to me. I hope the government doesn't allow these people to be treated so cruel and crass. This is suppose to be American, the greatest country in the world. Uhmmm, I don't see it.

    April 29, 2008 at 2:05 pm |
  47. Mike

    $1.75 M divided by 5000 residents is $350 each.

    April 29, 2008 at 2:05 pm |
  48. Jeremy Chastain

    The way the people of New Orleans have been treated by our goverment is beyond sad. As a volunteer who has traveled to N.O. many times to help the rebuilding process I have seen the hardship these people have faced with the relocation of family and friends, then to have OUR GOVERMENT expect them to pay for a mistake THEY made, is too much for these wonderful people to bare. FEMA still has thousands of ruined trailers sitting in a field outside of N.O. that are completely useless now, and guess who paid for those...thats right....taxpayers. Give them a break for once and call it even.

    April 29, 2008 at 2:05 pm |
  49. gg in big D

    Why would a person invest $100,000 in "repairing" a house in the Lower Ninth Ward to begin with? There isn't a house in that area worth $25,000.00.

    April 29, 2008 at 2:04 pm |
  50. Laura, Indiana

    How DARE they!? What about those people who still haven't seen a penny? If ICF "overestimated" they should be responsible and should bear the costs. What a shame. It makes me sick.

    April 29, 2008 at 2:04 pm |
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