$700 Million in Katrina Relief Missing, Report Shows

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Coburn said HUD should have a plan in place to ensure that people who receive grants use the money for its intended purpose. He said one area of particular concern is the $16 billion community development block grant program in the Hurricane Sandy aid package, which was signed into law earlier this year by President Obama after intense debate in Congress.

Senior officials at the Housing Department told ABC News that tighter controls are already in place for the Sandy rebuilding effort that were not operative during Hurricane Katrina.

"In the years since Hurricane Katrina, HUD has already implemented a number of the recommendations made by the Inspector General, including additional controls to ensure recovery funds are used properly," said Jerry Brown, a spokesman for the Housing Department.

But the call for stricter accountability in government spending rings hollow in the Gentilly neighborhood of New Orleans, where dilapidated houses remain an eyesore for Felicia Higgins, who said she went through a very "arduous process" to qualify for a government grant to elevate her home.

She believes some of her former neighbors are guilty of fraud.

"It hits you in the face every time you walk out the front door," Higgins said in an interview this week, standing outside her house that sits near abandoned and dilapidated property. "If they aren't going to spend the money for what it was intended, then they need to give it back."

Tina Marquardt, who works at Beacon of Hope, a community organization created to help New Orleans residents rebuild after Hurricane Katrina, said the people who received money from the Road Home Elevation Program should have been monitored to see if they were following the guidelines of the program.

"There needs to be a physical inspection of every property that received Road Home money," Marquardt said, adding that the damage is still taking a toll on New Orleans. "It decreases the quality of life in the neighborhood. It's an eyesore and it decreases the value of your own property."

More than seven years after Hurricanes Katrina and Rita struck the Gulf Coast, the rebuilding still continues, but the effort is underway with more urgency for the victims of Hurricane Sandy. Complicated bureaucratic rules that made it difficult for some homeowners to follow the guidelines of the program have been streamlined, officials said.

In an interview with ABC News, the inspector general said the home elevation programs were valid, but perhaps the owners should receive the money after they have completed their work on their property.

"Before you pay out funding such as this, up to $30,000 with a promise to do something," Montoya said, "we'd like to see the disbursement of these funds happen after the projects are done; almost a reimbursement to the state where inspections have been done to ensure that the homes were elevated."

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