Thursday, December 6, 2007

Busy month is under way for Road Home

The Road Home program will need a record number of closings in December to meet a contractual requirement of 90,000 completed files by year's end.

ICF International's contract with the state recommended a pace of 10,000 closings a month. But closings dipped to 9,000 in October, and fewer than 7,000 in November.

Still, ICF spokeswoman Gentry Brann said the Road Home team expects to meet the goal, which would mean closing nearly 16,000 grants in December, including Sundays, Christmas Eve, Christmas and New Year's Eve. The program had closed 74,311 grant applications through Monday and scheduled another 1,656 to close by the end of the year, the program's daily progress report says.

If the 90,000 benchmark isn't met, ICF faces a $150,000 penalty on its $756 million Road Home contract.

Walter Leger, housing chairman for the Louisiana Recovery Authority and an outspoken critic of ICF's handling of the Road Home program, said he also expects the contractor to rise to the occasion, but hopes it won't try to do it all during the holidays.

"This is a time we all want to spend with our families, not in lines or at day-long mass closings," Leger said. "Recognizing this, I sincerely hope they will continue working efficiently to get homeowners to closings as quickly as possible and won't wait until the end of the month."

Brann said Road Home put itself in position to meet the year-end goal by focusing on tracking down nearly 20,000 applicants who had received an award commitment letter, but hadn't yet chosen whether to rebuild or sell their home to the state -- a choice that must be made before their file can be transferred to the closing companies.

Another 38,000 applicants have done their part and selected their option, but still await a scheduled closing. Brann said those files have stalled because they are riddled with problems, such as a lack of proof that the applicant occupied the home at the time of the storm, or questions of clear title to the property.

"It's not a magic button you push to move people to closing," Brann said. "We need to have all the files that are ready to close, and that's why we put the effort into getting more letters returned to us" by applicants who have yet to choose a buyout or rebuilding grant.

So far, ICF has found ways to speed up closings when state-imposed deadlines loomed. As difficult as reaching 90,000 closings will be, ICF has what appears to be an even tougher contractual standard for closing buyout files -- the so-called Options 2 and 3 benefits, which allow for selling damaged homes to the state.

The contractual performance measures, implemented under public pressure in late July, call for ICF to close, by Dec. 31, 75 percent of "active" files for applicants who had selected a buyout by Oct. 31. There were 11,288 applicants who made that choice by Oct. 31. But Brann said the company doesn't have to close three-quarters of those files -- or 8,466 -- to meet the contract terms.

That's because the contractor doesn't consider about half of the 11,000 files "active," Brann said, because the applicants need to clear up a problem, such as a title issue, before the program can move forward to pay the grant.

Brann said 6,000 of the buyout files are considered inactive because the applicant hasn't established clear title or has what's called an "upside-down" mortgage -- the Road Home can't buy out a property for $75,000, for instance, if the owner owes $125,000 on the mortgage. The contractor has referred those homeowners to free legal and financial counselors, and has asked some lenders to forgive portions of mortgages.

As of Nov. 29, the company reported 2,974 buyout closings, ICF's reports show. ICF will be fined $50,000 for each percentage point below the 75 percent goal, up to $1 million. Mike Taylor, director of the state's Disaster Recovery Unit, which oversees Road Home, said ICF will have to account for all the files it reports as "inactive" when the state checks to see whether the company met its benchmarks. At the same time, the state has no interest in punishing the contractor for not closing files on which homeowners have not held up their part of the bargain.

"You can't hold someone responsible for closing a file that can't be closed," Taylor said.