W Sticks It To Katrina Victims Yet Again
July 25, 2007Agency Erred in Canceling Loans to 8,000 Along Gulf, Audit Finds
By RON NIXON
WASHINGTON, July 24 — The Small Business Administration, which runs the federal government’s largest program to help disaster victims rebuild their houses, improperly canceled thousands of loans it had promised homeowners along the Gulf Coast after the 2005 hurricanes, a government audit has found.
The agency canceled nearly 8,000 loans without calling the borrowers or mailing them a notice, according to the audit by the agency’s inspector general. The homeowners did eventually receive a letter contending that they had voluntarily given up their loans, the report says, even though many told auditors that they actually needed the money.
The loans were canceled last year, after the agency had come under fire for being slow to give out rebuilding money, according to the audit. Former agency employees have complained that they were pressured to withdraw the loans to cut the number of applicants whose loans had been approved but not paid out.
A spokeswoman for the agency declined to comment on the report.
The Senate Committee on Small Business and Entrepreneurship, which is examining problems with the agency’s disaster loan program, is planning a hearing on the audit on Wednesday.
“We all wanted to see the loans processed and disbursed more quickly and the red tape removed,” said Senator John Kerry, the Massachusetts Democrat who is chairman of the committee. “Unfortunately, even with good intentions, some disaster victims are still being left behind, and that’s not acceptable.”
The audit is the latest in a series of problems for the troubled agency, which was widely criticized for its slow response to Hurricanes Katrina, Rita and Wilma. Earlier audits found that poor planning, low levels of staffing and problems with a new computer system had led to a backlog of hundreds of thousands of loan applications.
Steven C. Preston, the agency’s administrator, made fixing the disaster loans program his top priority when he took office last July.
But the audit found that agency employees might have cut corners to reduce the backlog. In many cases employees made only one call and sent no letters, according to the report. Because of problems with the agency’s computer system, its records indicated that these borrowers had requested that their loans be canceled.
posted by KingCranky II @ 12:44 AM
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