After the Katrina disaster thousands of people applied for loans from the Small Business Administration, the agency which runs the federal government’s largest program to help disaster victims rebuild their houses. I know this is hard to believe, but it seems that they 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.
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