One Year Later, Lenders Still Facing Fallout from Katrina.

Las Vegas-Nearly one year after a series of hurricanes devastated the Gulf Coast, the storms remain a hot topic for servicers who met here recently for the Western States Loan Servicing Conference.

In part, that is because moratoriums on foreclosure are soon scheduled to expire, which means lenders will have to address the delicate topic of foreclosing on properties where families were devastated and displaced by the storms.

In some cases, of course, the homes were totaled by the storms, especially homes affected by Hurricane Katrina. Robert Klein, CEO of Safeguard Properties, described the aftermath of Katrina as "absolutely the most devastating thing that I've seen in my life." His company has inspected 400,000 homes for damage since Hurricane Katrina struck last year.

As the first year of Katrina's impact comes to a close, Mr. Klein said there are some lessons to be learned and some challenges still ahead for the industry.

In some cases, home inspections have found that insurance proceeds have not been used to repair homes, he said. In addition, there have been cases where contractors have allegedly overcharged for work or not performed work that was paid for on a timely basis. In some cases, local homeowners and officials have complained about excessive bids for work.

"It should cause some concerns," he said. "There is a shortage of qualified contractors."

Ron Reitz of GMAC-RFC said there have been cases where insurance proceeds that were supposed to include the mortgage lender as a beneficiary were cashed without the lender's endorsement, either through fraud or because the lender wasn't included on the check. He also said it is sometimes difficult for lenders to obtain information from insurance companies about whether or not a claim has been paid.