Superstorm Sandy victims get 2-year reprieve on repaying federal disaster funds

opens in a new windowSuperstorm Sandy victims get 2-year reprieve on repaying federal disaster funds / NorthJersey.com / 3/28/2022

New Jersey victims of superstorm Sandy have received a two-year reprieve from repaying about $73 million in funds the federal government says they were overpaid.

About 1,813 New Jersey homeowners will not have to repay that money before 2025, according to a press release from U.S. Rep. Frank Pallone’s office.

U.S. Reps. Pallone, Bonnie Watson Coleman, Andy Kim and Bill Pascrell, all D-N.J., announced earlier this month that they had secured a two-year delay in federal efforts to recoup monies from Sandy victims. The delay was included in the 2022 omnibus spending bill, which was signed last week by President Joe Biden.

Joe Mangino is one of hundreds of Sandy victims who has received a so-called "clawback" letter from the state, which claims that he was overpaid thousands of dollars rebuilding his house. In many cases, victims did not realize that there was a so-called "duplication of benefits" when they got both RREM grants and SBA loans.  Stafford Township, NJ Wednesday, October 23, 2019

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 be asked to repay some of the grant funds they received. 

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. Sandy advocates say in many cases the clawback happens because paperwork is missing or forms have not been filled out correctly.

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“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,” Pallone said in a prepared statement. “A two-year delay in recoupment of these funds will help hundreds of New Jersey families. My colleagues and I will continue fighting for full relief.”

The two-year delay in the repayment process marks the latest effort by the state’s Congressional delegation to assist homeowners still affected by Sandy, which struck the Jersey Shore on Oct. 29, 2012. Both Democrats and Republicans in the state’s delegation  opens in a new windowhave fought to have clawbacks eliminated.

U.S. Rep. Frank Pallone Jr. D-N.J. speaks in front the Long Branch Public Library on Jan. 6, 2022, to announce funding for library construction.

Last fall, 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.

“I’m proud to have fought for and won two years of additional relief for Jersey Shore homeowners in this year’s government spending package,” said Kim in a prepared statement. “It’s been over nine years since Superstorm Sandy devastated our communities. This relief is an important step in our recovery, but I won’t stop fighting until we pass our Security After Sandy Act to make this relief permanent.”

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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. 

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 funds than necessary to repair damaged houses.

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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 — prevents the homeowner from selling the house, or even refinancing the mortgage, unless the clawback is repaid. Watch homeowner Joseph Mangino discuss the clawback he is facing in the video above.

“We are grateful for Congressman Pallone’s hard work in getting CDBG-DR funding extended for a few more years, giving us a chance to once again push for clawback forgiveness and give Sandy families closure,” said Jody Stewart, organizer the New Jersey Organizing Project, a Sandy advocacy group.

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.com.

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