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A plan for helping New Orleans homeowners rebuild their lives

Six months after being hit by one of the most destructive natural disasters in the nation's history, the flooded-out neighborhoods of southern Louisiana are passable by road and the street lights have returned. Even so, mile after mile of homes are nothing more than hollowed-out shells. Where there were once thriving communities now sits the world's largest scrapyard.

It is estimated that more than 120,000 owner-occupied homes were destroyed or sustained major damage in the greater New Orleans area, with another 200,000 bearing lesser scars. The rebuilding job ahead will take the optimism and resolve of the Pharaohs of Giza.

Homeowners have had to put up with a lot since Aug. 29, but now it's the limbo that's hurting them most. Tens of thousands of Louisiana homeowners are struggling to pay mortgages on their destroyed properties while renting another place to live. They need to know that a plan will soon be in place that allows them to start stitching their lives together.

President Bush rejected a sensible idea from Rep. Richard Baker, R-La., to create a Louisiana Recovery Corp. that would use federal funds to compensate homeowners and buy up damaged homes for possible redevelopment. Filling the void is a solid proposal coming from Louisiana Gov. Kathleen Blanco.

Blanco's plan would provide homeowners with buyouts, reconstruction grants and low- or no-interest loans. The assistance money would be capped at $150,000 to each individual homeowner and would be offset by payments from insurance companies and FEMA. Because the state wants to encourage rebuilding within Louisiana, homeowners who do not plan on returning to the state would be eligible to recover only 60 percent of the home's pre-storm value; and if a homeowner was within a flood plain and didn't maintain flood insurance, 30 percent would be deducted from the final payment.

The program's parameters and incentives are eminently reasonable. No one walks away a millionaire, but every owner with substantial damage would receive enough money to begin again.

The $7.5-billion program has a way to go before it's adopted and operational. An appropriation of $4.2-billion in additional federal housing dollars for Louisiana has to be approved first. Bush has signaled his support, but the money has not yet passed Congress.

Despite what some say, this is a federal responsibility. The reason most Katrina-devastated homeowners didn't have flood insurance is they were told by FEMA that it wasn't required. Moreover, the federal Army Corps of Engineers is charged with the construction and maintenance of the area's levee system. Had those levees not failed, most homeowners would not be facing the losses they are now.

There will be a public process and debate before Blanco's proposal is final. But every week of delay means more people will give up on their former neighborhoods or the state, and start putting down roots elsewhere. Every stakeholder has to push hard to speed this along to help Louisiana's homeowners stay afloat and start over.