After katrina, nearly a billion dollars was handed out for the rebuilding of homes. But tonight, the rebuilding, the money, is missing. Abc's jeff zeleny. Reporter: Felicia higgins lost everything in... See More
After katrina, nearly a billion dollars was handed out for the rebuilding of homes. But tonight, the rebuilding, the money, is missing. Abc's jeff zeleny. Reporter: Felicia higgins lost everything in katrina seven years ago. But, she built her home using federal money from the road home prog she still starts every day looking out at this. It hits you in the face every time you walk out the front door. Reporter: Abc news has learned that hundreds of millions from that program is missing. And was never used to restore her neighborhood and others across new orleans. After katrina taxpayers paid one billion for homeowners to fortify their houses against future floods. But a new government investigation finds more than 24,000 homeowners who received as much as $30,000 each to elevate their homes, reinforce foundations and even insulate windows, either pocketed the money or used it for something else. David montoya is the inspector general at the department of housing and urban development. He tells abc news the "road home elevation program" was a failure. His grade? A low "d." This is $700 million of taxpayer money? It is taxpayer money. It's what you and I give up every single year from our hard earned wages. Reporter: Here in the gentilly neighborhood of new orleans, terrie tourras lives across the street from this. She believes they took the money and ran. Oh, it drives me crazy. Reporter: Congressional watchdogs like senator tom coburn agree. This kind of fraud could happen all over again with hurricane sandy relief. He's urging the obama admisistration to impose tighter controls. Press secretary donovan declined to speak with abc news. But said tighter controls would be placed on money for hurricane sandy relief, making sure people who really need the money get it.
This transcript has been automatically generated and may not be 100% accurate.