Hangup Delays Mississippi Katrina Grants

Over 16,000 Mississippians have signed up for federal grants to rebuild their homes damaged in Hurricane Katrina, but a hangup over an environmental assessment has postponed disbursement of the first checks.Lenders' groups have warned the Mississippi Development Authority that it cannot avoid making a full environmental assessment simply because it has no control over the homeowners' use of the assistance grants. "The EA fails to explain how it can conclude a direct grant program is so vague and limitless that the state cannot begin to evaluate the environmental impact of these expenditures," says a June 16 letter by the Mortgage Bankers Association, the Consumer Mortgage Coalition, and the Housing Policy Council. The MDA has asked the Department of Housing and Urban Development for a ruling on this issue, which the state agency expects to receive in a few days, a spokesman said. In developing its assistance program, Mississippi rejected lender recommendations that the assistance grants be placed in escrow accounts with the homeowners' mortgage lender. Nevertheless, the trade groups still insist that the use of escrow accounts will ensure that more of the Community Development Block Grant funds are used for rebuilding. "The program must be capable of ensuring that the money is in fact used for the purposes authorized by Congress," the trade groups say.