Sandy victims might get indefinite reprieve on federal disaster clawback repayments

opens in a new windowSandy victims might get indefinite reprieve on federal disaster clawback repayments | Asbury Park Press | December 22, 2022

Federal efforts to recoup money from Superstorm Sandy victims would be halted indefinitely under a provision included in the $1.7 trillion spending package Congress is expected to vote on before the end of this week.

Passage of the bill, which funds federal agencies through 2023, could provide a reprieve for more than 1,700 homeowners, who would not be forced to repay about $70 million in funds the federal government claims they were overpaid.

“New Jersey families were decimated by Superstorm Sandy and are still on the hook for millions of dollars in federal clawbacks through no fault of their own,” said U.S. Rep. Frank Pallone Jr., D-N.J., in a prepared statement. “An indefinite extension in recoupment of these funds will help hundreds of New Jersey families. My colleagues and I will continue fighting for total forgiveness so residents can have the peace of mind they deserve.”

The inclusion of an indefinite repayment delay in the federal funding bill marks the latest effort by New Jersey’s congressional delegation to remove the burden of repayments, known as “clawbacks,” from homeowners. Both Democrats and Republicans have worked to delay clawbacks while working to eliminate the need for homeowners to repay the money.

The aftermath of Superstorm Sandy's severe flooding is seen on Coolidge Avenue in Ortley Beach.

 

 

Earlier this year, Pallone and fellow Democrats, U.S. Reps. Bonnie Watson Coleman, Andy Kim and Bill Pascrell,  opens in a new windowannounced they had secured a two-year delay in clawback repayments, meaning homeowners would not have to repay any money until 2025. The delay was included in the 2022 omnibus spending bill, which was signed in March by President Joe Biden.

Advocates and Sandy victims have been lobbying for years for the repayments to be canceled, saying the process is unwieldy, confusing and filled with errors. Groups that work with Sandy victims say in many cases clawbacks have happened because paperwork is missing or forms have not been filled out correctly.

U.S. Rep. Frank Pallone Jr. discusses coastal defenses in the 10 years since Superstorm Sandy on the boardwalk in Asbury Park, NJ Monday, July 25, 2022.

 

 

New Jersey Gov. Phil Murphy’s administration announced a freeze on the recoupment process, also known as “clawbacks,” in 2018, saying the state Department of Community Affairs would no longer be attempting to collect repayment of grant funds. But while the freeze was welcomed by Sandy victims, it has also left them in limbo, unsure if they will eventually be asked to repay some of the grant funds they received. 

In the fall of 2021, Pallone and Kim announced at a press conference in Toms River that $26 million in federal Sandy disaster loans,  opens in a new windowowed by 19 Jersey Shore towns and school districts, had been forgiven and would no longer have to be paid back. The congressmen vowed to seek clawback forgiveness for individual homeowners as well, and  opens in a new windowreiterated that commitment at an event held in Middletown on Oct. 29 to mark the 10th anniversary of Sandy.

“It’s been over a decade since Superstorm Sandy first made landfall in New Jersey and a lot of my neighbors are still burdened with the debt taken on to repair their homes,” Kim said in a prepared statement. “Two years ago, we were able to cancel loans for a lot of municipalities that were struggling, last year we got homeowners relief until 2025, and this year we expanded that relief indefinitely.”

Urged by government officials to rebuild quickly, many homeowners applied for numerous funding programs in the wake of Sandy, which damaged or destroyed more than 70,000 homes in the state, according to estimates.

Homeowners who participated in the state’s largest rebuilding program, the Reconstruction, Rehabilitation, Elevation and Mitigation program (RREM), as well as the initiative for lower-income homeowners, the Low-to-Moderate-Income Homeowners Rebuilding program (LMI), have received clawback letters. 

Representative Andy Kim (D-NJ) and Representative Frank Pallone (D-NJ) listen to various storm victims remarks.The Sandy advocacy group, the New Jersey Organizing Project, holds a commemoration for the 10th anniversary of Superstorm Sandy that focused on the failures of the federal and state disaster recovery system. Storm victims from Tropical Storm Ida and Hurricane Katrina attend, along with state and federal legislators and several Sandy victims. Port Monmouth, NJ Saturday October 29, 2022

Since the programs were funded with federal block grants distributed by the Department of Housing and Urban Development, the RREM and LMI programs operate under the auspices of the federal Stafford Act, which bars homeowners from receiving more money than deemed necessary to repair damaged houses.

The law also bans so-called “duplication of benefits,” which means other sources of aid, including Small Business Administration loans, insurance proceeds and money intended to be used to elevate homes, are included in the calculation of the amount of money a Sandy homeowner should receive to rebuild.

Even though the repayments have been frozen, they have prevented RREM from closing homeowners out of the program. That means a deed restriction — or covenant, in the state’s parlance —  opens in a new windowprevents the homeowner from selling the house, or even refinancing the mortgage, unless the clawback is repaid.

“America came together after Superstorm Sandy to help New Jerseyans through a very dark period,” Watson Coleman said. “Now those families can finally put this decade long nightmare behind them. The burden of having to pay back repair money that was erroneously given to them through no fault of their own is finally being lifted.”

Jean Mikle covers Toms River and several other Ocean County towns, and has been writing about local government and politics at the Jersey Shore for nearly 37 years. She’s also passionate about the Shore’s storied music scene. Contact her: @jeanmikle,  jmikle@gannettnj.comcreate new email.

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