(Photo: Bevil Knapp/Landov)

Housing and Urban Development Secretary Shaun Donovan announced Wednesday that the agency would pay a $62 million settlement to 1,460 Hurricane Katrina victims who sued the federal government and the state of Louisiana for alleged discrimination in the Road Home program, which provided grants to people to rebuild their destroyed homes.

Five homeowners and two civil rights groups, the Greater New Orleans Fair Housing Action Center and the National Fair Housing Alliance filed the suit in 2008, arguing that the formula used to determine grant amounts was discriminatory because it was based on pre-storm property values instead of the actual cost of rebuilding. As a result, white homeowners living in more affluent parishes were more likely to receive an adequate grant.

“One of the things we recognize here is that the way the Road Home was implemented was a piece of the problem,” Donovan said. “This agreement is a huge help to families who clearly want to get back into their homes but continue to struggle to make the needed repairs to their properties.”

Most of the settlement will be awarded to homeowners in Orleans Parish, although residents of Cameron, Plaquemines and St. Bernard parishes also will be eligible. It builds on adjustments made to Road Home two years ago that provided an additional $470 million in grants to more than 13,000 low- and moderate-income homeowners to supplement the grants they’d already received.

“Regrettably, the Road Home program became a roadblock for many,” said James Perry, executive director of the Greater New Orleans Fair Housing Action Center. “This settlement is a step in the right direction toward getting more hurricane-affected homeowners back into their homes and making good on America’s promise to build a better New Orleans in a way that is fair and equitable for all people regardless of their race.”