2021 Update on Clawbacks

UPDATE 1/28/2021: We have a new opportunity to push for RREM clawback forgiveness at the Federal Level – where the problem started in the first place. We are hopeful new HUD leadership will work with us on this.

If confirmed, @HUDgov Secretary-nominee @RepMarciaFudge promised me she’ll make helping #HurricaneSandy survivors facing clawbacks one of her top priorities. pic.twitter.com/5z3MkpYnyk

— Senator Bob Menendez (@SenatorMenendez) January 28, 2021

Last year was a tough year.  For many of us, COVID-19 was the disaster on top of the disaster on top of the disaster.  And we still fought for Sandy families to make it home or hold on until they get there and to make our disaster recovery systems put families, not politically connected contractors or private insurance, first.  

We did make some progress in 2020:  We won an extension on NJ’s time to spend Sandy funds until Sept. 2023, so one year.   Essentially, it takes a year’s worth of pressure off the state to pay the feds back (and, then, hopefully, off homeowners,) but it’s the same thing we currently have, not a fix.  This just buys us more time to fight.  

2021 is another year to fight & move forward:

We know that New Jersey Congressional delegates are committing to move Forgiveness forward once again on a federal level.  SO what does that look like for us?

1. We can move the federal government to forgive clawbacks and there are a couple ways we can do that: 
   • We can get the Security After Sandy Act Reintroduced.  This is one way to continue to draw attention to the struggles of Superstorm Sandy survivors and the broken recovery system. It also gives us the opportunity to gain support for Clawback forgiveness not just from our Representatives but in the public eye.
   • We also know that is not the only way to get to Clawback Forgiveness. Language can be introduced to both the House and the Senate Appropriation Committees with the goal of Clawback Forgiveness. This is just another way we achieve our goal of forgiveness, just a different method. 
   • Finally having our language of Forgiveness from the Appropriation committees added to bigger deals like an Omnibus or mini Omnibus. This would still give us the result we are moving forward with a different path to get there. 
2. On a State level we need to be mindful that Governor Murphy has put a freeze on the repayment of the RREM clawbacks. By doing that, he is giving us the opportunity to continue fighting for a solution to get the forgiveness Sandy survivors need for closure and healing. We also know it is an election year and Governor Murphy is up for reelection so what does that look like for the freeze? Will the freeze still be in effect if another Governor is elected? This something we need to take into consideration.

So where does this leave us at this moment with Clawbacks?  We still have the temporary freeze on clawbacks that Governor Murphy put in place. That does not mean the letters will stop and the money is owed. It just means you do not have to repay it at this time. The Governor is giving us time to find a solution for the thousands of families being asked to return state grant funds.  

In 2020, we worked hard on achieving clawback forgiveness on a federal level. 

Congressman Kim and Congressman Pallone introduced the Security after Sandy Act. To make it simple – this bill would forgive clackbacks caused from duplication of benefits like SBA loans and ICC. It would also forgive Community Disaster Loans that many communities are being forced to pay back. My community is one of them. What does that mean is if my community has to pay back the Community Disaster Grant to the tune of millions of dollars? It would mean higher property taxes.

We also had language introduced into the House Appropriation Committee that would give forgiveness to families that were experiencing clawbacks. 

 It contained three essentially important provisions:

1. One that extended NJ’s time to spend Sandy funds – which also extends when NJ has to pay the federal govt any clawback back too – until Sept. 2025
2. Says that HUD can waive DOB “aka not in the best interest of the Federal Government to pursue such remedies,” and allocated funding to cover them – which would have applied to CDL loans and RREM clawbacks *though* would have needed HUD to implement. 
3. Basically waived clawbacks flat out (this would reduce the total amount the govt had to pay itself back in the appropriation) in cases where folks were defrauded, filed for bankruptcy, gone through foreclosure or are deceased. 

In December 2020, our language from the House went to the Senate but unfortunately all our needs were not accepted.  

Here is what was accepted:  A one year delay in recoupment efforts for debt-owed to the federal government in relation to Superstorm Sandy has been included in the year end federal spending bill. These recoupment efforts known as “clawbacks” have blindsided homeowners because many New Jersey residents applied for loans and benefits offered by various federal programs based on the federal government’s recommendation. 

The one-year delay pushes the deadline for recoupment from 2022 to 2023 and will provide relief for families currently required to pay back disaster relief funds they received after Superstorm Sandy.

This is the best end result but it gives us another more year to fight for the full recovery our communities need and deserve.