SANDY-VICTIMS WHO DECLINED GOV’T LOANS IMMEDIATELY AFTER SUPERSTORM SANDY NOW FACE PROSPECT OF RECEIVING FEWER RESOURCES FROM AID BILL DUE TO COMPLEX BUREAUCRATIC RULES - SCHUMER PUSHES FOR RULE CHANGE TO ALLOW FOR MAXIMUM AID
Many Sandy-Victims Were Offered SBA Loans But Rejected Them Because They Couldn’t Afford More Debt
HUD Policy Now Requires The Amount of Approved Loans, Including Those Not Accepted, Be Deducted From Potential Grant Amount Provided To Homeowners
In Personal Call, Schumer Urges HUD to Change Policy So SBA Loans Not Accepted by Homeowners Due to Affordability Concerns Do Not Reduce Eligibility for Grants
Yesterday, U.S. Senator Charles E. Schumer announced he has urged Housing and Urban Development (HUD) Secretary Shaun Donovan, head of the federal Hurricane Sandy Rebuilding Task Force, to waive a policy that would negatively impact Sandy-victims who rejected Small Business Administration (SBA) loans in the aftermath of the storm, because they couldn’t afford to take on more debt. Community Development Block Grant (CDBG) funding, which comes in the form of a grant, not a loan, is intended to supplement other forms of available aid, and cover only “unmet need.” In determining the amount of “unmet need,” HUD regulations provide that any SBA loans for which a homeowner is approved are counted against the of unmet need. But these regulations do not take into account the individual circumstances of homeowners who may not be able to afford to take on more debt. In a personal call to HUD Secretary Donovan, Schumer made the case that many homeowners turned down SBA loans because they cannot afford to incur additional debt, and loans approved by SBA, should not count as a “benefit” that limits the amount of CDBG a homeowner receives when the homeowner declined to accept that loan for legitimate reasons.
“Many victims of Sandy were in the midst of major home repairs and had no choice but to reject these offered SBA loans because they could not take on any more debt,” said Schumer. “This policy will punish these homeowners and HUD should do everything in it power to make sure these individuals are eligible for additional federal assistance.”
By law, duplication of benefits is allowed in the provision of supplemental disaster assistance. Based on HUD regulations, CDBG disaster assistance is supplemental and designed to cover “unmet needs.” Insurance, Federal Emergency Management Agency (FEMA) Individual Assistance and any approved SBA disaster loans are deducted from total needs to determine the unmet needs. Under this HUD guidance, approved SBA loans count as a benefit that is “reasonably available” to the homeowner regardless of whether or not the homeowner actually accepts the loan.
In a personal call to HUD Secretary Donovan, Schumer highlighted the negative impact of this policy. Schumer made the case that many Sandy-victims who were offered an SBA loan turned it down because they did not think they could take on any more debt. Schumer explained that offered loans, if not accepted, should not count as a benefit that would limit the amount of CDBG a homeowner can receive. HUD is reviewing the request to ensure that homeowners are not forced to choose between incurring unsustainable debt burdens and or losing access to assistance necessary to rebuild their homes following Superstorm Sandy.