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A new bill would establish protections for Sandy victims who have been told to pay back some of the money they were given to rebuild.
“There are over 100 homeowners that are getting these letters,” Assemblyman Reed Gusciora, D-Mercer, said at a news conference announcing the bill, which was introduced Thursday. “It is unconscionable that the state would be doing this at this time.”
Gusciora said his bill would create a defined process for homeowners who receive letters demanding repayment, including an appeals process for those who dispute the amount they have been told to repay.
Gusciora’s bill would:
- Delineate a clear process through which the state Department of Community Affairs would notify homeowners who might have received too much money.
- Establish options for repayment.
- Set limits on maximum monthly payments based on income.
- Create an appeals process through which homeowners can petition DCA to cancel their debts.
- Allow DCA to consider hardship conditions when attempting to collect debts.
Homeowners in the state’s signature rebuilding programs, Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) and the Low- and Moderate-Income Rebuilding Program — have been receiving recoupment, or “clawback” letters from the state Department of Community Affairs, demanding that they repay some of the funds they received to rebuild.
The New Jersey Organizing Project, a Sandy advocacy group, has been lobbying for legislation to help protect homeowners from clawbacks.
The state is required to audit Sandy funds to make sure they have been spent properly, but Sandy advocates say in many cases the clawback happens because paperwork is missing or forms have not been filled out correctly.
DCA spokeswoman Lisa Ryan said the RREM program operates under the auspices of the federal Stafford Act, which bars homeowners from receiving more funds than necessary to repair their damaged house.
The law also bans so-called “duplication of benefits,” which means other sources of aid, including Small Business Administration Loans, and insurance proceeds, are included in the calculation of the amount of money a Sandy homeowner should receive to rebuild.
When a homeower prepares to close out of the RREM program, DCA completes a final review of their grant to make sure all work eligible for grant funds has been documented and included in the grant award calcuatlon, Ryan said.
The state is required by federal law to recoup any funds received by a homeowner that were used for ineligible expenses, or exceeded the money needed to rebuild.
Recoupment letters often come as the homeowner is in the process of closing out, or completing their rebuilding project, according to Sue Marticek, executive director of the Ocean County Long-Term Recovery Group, an umbrella group of 80 nonprofits that has been assisting Sandy survivors.
“This is something we have been seeing more and more,” Marticek said of the recoupment letters.
The long-term recovery group has been advising homeowners to reach out to them or to other Sandy advocacy organizations to see if there is any alternative to immediately repaying the funds.
She said homeowners often have paperwork to prove grant money the state is trying to recoup was actually used for eligible Sandy-related repairs.
Ryan said the state has agreed not to attempt to recoup any additional flood insurance proceeds homeowners received following a review of their flood insurance claim.
If DCA determines a homeowner must repay money, the state allows interest-free repayment over a 36-month period, Ryan said.