Some Sandy Families May Now Benefit From Repayment Relief

Some Sandy Families May Now Benefit From Repayment Relief / The Two River Times / January 23, 2025

By Sunayana Prabhu

Hundreds of families still burdened with repaying federal disaster aid in the aftermath of Super Storm Sandy will now be eligible for a permanent waiver of these “clawbacks” after years of advocacy.

U.S. Rep. Frank Pallone Jr. (D-6) joined disaster advocates in Union Beach Jan. 16 to announce that the U.S. Department of Housing and Urban Development (HUD) has issued a new policy to permanently waive the repayment of federal disaster aid for eligible households across New Jersey.

For years, clawbacks have haunted survivors of Sandy, many of whom had to rebuild from scratch only to be told years later that they owe thousands to the government in disaster aid debt. After nearly a decade of pushback from advocates at the state and community levels, HUD will be waiving disaster aid debt for around 900 families statewide – an estimated $30 million or an average of $28,000 per household. The policy, however, is not all-encompassing. The HUD has set criteria for eligibility: recipients must be low- and moderate-income survivors and those who have faced foreclosure or bankruptcy or who have lost loved ones after receiving federal disaster aid.

The eligibility for low- and moderate-income households is defined by county. A family of four in Monmouth qualifies if their income is approximately $100,000, Pallone explained at the press conference.

The announcement was made in one of the towns hardest hit by the hurricane-turned-superstorm in 2012. Several other municipalities in the Bayshore and along the state’s coast also suffered major damage during the storm.

The clawbacks issue emerged in the aftermath, when federal agencies encouraged storm victims to apply for a variety of aid programs, often resulting in “duplicative benefits,” noted Pallone. Years later, those agencies sought to recoup the perceived overpayments, placing liens on homes and making it nearly impossible for residents to sell or refinance their properties.

Pallone, who represents a majority of the area hit hardest, recalled the frustration he witnessed firsthand. “I remember during Sandy (recovery), the various federal agencies – and I suppose state and local, too – were set up in an office on Route 36 in Port Monmouth,” he said, referring to federal agencies like the Federal Emergency Management Agency (FEMA), the Small Business Administration (SBA) and HUD that had set up assistance centers where residents could apply for various relief programs.

According to Pallone, the officials at these centers actively encouraged storm victims to “apply for everything,” meaning they could submit applications to multiple federal agencies to seek disaster aid, even if the programs overlapped. The rationale was that it was better for residents to get as much aid as possible rather than risk missing out on potential benefits. However, this well-intentioned advice ultimately backfired. Years later, the federal government decided, “You can’t duplicate these efforts and, therefore, you owe money,” Pallone explained.

The agencies later deemed some applications and payouts improper and demanded residents pay back the money they received from multiple sources. This led to the dreaded clawbacks, liens placed on repairs of homes and financial penalties that made it challenging for families to move forward with their lives.

“It’s just fundamentally unfair,” said Pallone, since residents were simply following the guidance provided by the government.

Pallone, along with several state and community advocates led by the New Jersey Organizing Project (NJOP), a grassroots nonprofit founded by Sandy survivors in 2014, has been campaigning for the right to storm recovery for nearly a decade. In 2022, Pallone secured an indefinite legislative extension of recoupment efforts for debt owed to the federal government included in the Omnibus Fiscal Year 2023 package, but that did not absolve homeowners of the funds owed.

On Dec. 11, he joined disaster survivors at the U.S. Capitol, including advocates from the NJOP, to push for comprehensive and equitable disaster recovery solutions.

While the new HUD policy provides relief to those caught in the duplicative efforts trap and the community celebrates this victory, advocates believe there is still a long road ahead to fully address the lingering impacts of the disaster and rebuild a more resilient system for the future.

“This is kind of a big deal. (A) huge weight has been lifted off the shoulders,” said Joe Mangino, board president of NJOP, who has been at the forefront of the fight for nearly a decade. He recalled the “disaster after the disaster” that survivors had to deal with when “thousands of families” received the letter from the state with repayments intentions,” Mangino said. “We followed all the rules, but yet they wanted to take back the very thing that got many of us home. Rebuilding projects stopped, liens (were) placed on our homes. We couldn’t refinance, couldn’t sell our house without paying back that grant, and that’s just one example of the broken disaster recovery system.”

State officials will now work to determine eligibility to ensure that the relief reaches those who need it most. “We’re hopeful that this helps not only those Sandy families and those survivors who have held on for so long, but also the possibility that this could help actual disaster victims from across the country,” Mangino said.

The NJOP has also been calling for the permanent authorization and full funding of the HUD’s Community Development Block Grant-Disaster Recovery program that would ensure survivors can rebuild faster and more equitably. “One of the problems that we have with disaster recovery is every time there’s a new disaster, we have to set up a new system so that people get relief. And it shouldn’t be that way. It should be permanently authorized,” said Pallone.

The article originally appeared in the January 23 – 29, 2025 print edition of The Two River Times.