BUYOUT IN WORKS (Nagin's new plan for New Orleans)

BUYOUT IN WORKS
Five parish leaders agree to make thousands whole
Monday, February 13, 2006
By Gordon Russell, Frank Donze and Laura Maggi
Staff writers

In a major development that could at last provide definitive options to New Orleans-area homeowners sitting in limbo, the leaders of the five metropolitan parishes hardest-hit by Hurricane Katrina have signed on to a plan to offer owners of flood-damaged houses the choice of a buyout at full, pre-storm market value or a renovation grant to cover most repairs.

The program, which New Orleans Mayor Ray Nagin has cheekily titled the "Failed Levees Homeowner Recovery Program," is the most detailed blueprint for making homeowners whole since the apparent death of legislation by U.S. Rep. Richard Baker that would have allowed owners of flood-ravaged homes to recoup 60 percent of their equity.

The new plan, surprisingly, would be more generous than Baker's in some cases, although probably not in the case of high-priced homes or homes with large mortgages. The grants, whether for buyouts or renovations, would be capped at $150,000, while the Baker legislation would have settled the mortgages of homeowners who sold, regardless of the size of the mortgage. Under the new proposal, those with mortgages well above $150,000 might be more apt to use the money to renovate and continue paying their mortgage, rather than take the buyout.

There are still numerous caveats: Most important, the plan needs the approval of key state officials and the White House. Nagin, who acknowledged that the initiative is a work in progress, said it is designed to jump-start the region's moribund economy by putting money in the hands of homeowners quickly.

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