In a big win for lenders, the Louisiana Recovery Authority has decided that assistance grants going to homeowners with hurricane-damaged properties should be placed in escrow accounts."Compensation to the homeowners with mortgages will be disbursed at closing directly to an escrow account with the homeowner's lender," LRA spokeswoman Catherine Heitman told MortgageWire. Mortgage lenders and servicers have urged Louisiana and Mississippi to require escrow accounts as a way to ensure that the Community Development Block Grant funds appropriated by Congress are used for repairs and rebuilding. Mississippi decided to disburse the grant assistance directly to homeowners. Louisiana is going with escrow accounts. "We want the money to be used to rebuild and repair homes," Ms. Heitman said. LRA officials are still discussing whether homeowners who own their homes outright and don't have a mortgage should be required to have escrow accounts. About 120,000 Louisiana residents are expected to receive assistance grants.

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