About 3,000 Superstorm Sandy victims who were either wrongly given storm recovery aid or who were overpaid would not have to repay the federal government under legislation to be introduced this week by two New Jersey Congressmen.
U.S. Sen. Robert Menendez and U.S. Rep. Frank Pallone will introduce identical bills that would prohibit the Federal Emergency Management Agency from issuing so-called “clawback” letters demanding repayment of aid it wrongly awarded to homeowners.
The law would not apply to cases of fraud.
They estimate 3,000 homeowners in New Jersey and New York have gotten repayment demands so far. The Democratic lawmakers say the legislation is designed to help storm victims who applied for aid, got it, and through no fault of their own, were later found to be ineligible or overpaid. In many cases, the lawmakers say, that money has already been spent on repairs.
“Disaster victims should never have to pay for someone else’s mistake,” Menendez said. “These families have suffered enough, are barely holding on financially and emotionally, and can’t afford to pay back money they thought all along was rightfully theirs to use towards their recovery.”
“Homeowners still struggling to rebuild from the devastation of Sandy should not be forced to repay grants that were awarded because of honest mistakes,” added Pallone. “While I understand the importance of reducing waste, fraud, and abuse in the system, the efforts to do so should not be made on the back end of this process in a way that punishes disaster victims with an unaffordable bill.”
The letters threaten legal action, negative reports to credit agencies, property liens and ineligibility for future federal disaster assistance, the lawmakers said.
A FEMA spokesman did not immediately respond to a request for comment last Friday.
A similar bill banning repayment demands from Hurricane Katrina victims was approved by Congress and ultimately signed by President Obama in 2012, according to Steve Sandberg, a spokesman for Menendez.
At a news conference in a still-rebuilding neighborhood of Union Beach that was severely damaged by Sandy, Menendez said preliminary statistics from FEMA show the agency has issued 809 repayment demand letters in New Jersey, and about 2,200 in New York. The average repayment demand to New Jersey residents was about $7,000; a figure for New York was not immediately available.
The legislation would apply to aid recipients who earn $250,000 a year or less.
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