HUD’s Original Policy Hurt Sandy-Victims Who Declined SBA Loans After Superstorm Sandy; Schumer Successfully Pushed to Change Rule So
Homeowners that Declined Loans Now Eligible for Grants
Schumer Urges Staten Islanders Who Have Not Yet Applied to Move Forward with NYC “Build it Back Program” Procedure; Many Sandy-Victims Are Not Yet Aware of Beneficial Policy Change
Schumer Urges HUD to Allow Flexible Individual Determinations to Maximize the Number of Sandy-Victims Eligible for Grants
New York, NY – July 31, 2013 – (RealEstateRama) — U.S. Senator Charles E. Schumer today urged Sandy-impacted homeowners on Staten Island to apply to New York City’s “Build it Back Program” now that the U.S. Department of Housing and Urban Development (HUD) has modified its guidelines to include more flexibility for those who originally turned down Small Business Administration (SBA) loans. Originally, HUD’s guidelines included a “duplication of benefits” policy that negatively impacted victims who were offered but turned down SBA loans, often times because they were prudently avoiding additional debt. Previously, for these homeowners the Community Development Block Grant (CDBG) assistance they would be eligible for would be reduced by the amount of any approved SBA loan (even when it was not accepted by the homeowner). Now that this adverse policy has been changed by HUD, Schumer today urged Sandy-victims who have not yet applied to “Build it Back” to do so expeditiously.
Schumer today also urged HUD, which requires grantees, in this case New York City, to provide a determination of eligibility for each individual case, to allow maximum flexibility in these justifications. HUD’s guidelines suggested that inappropriate determinations of CDBG assistance would result in programmatic sanctions on New York City. Schumer today urged HUD to do everything possible to ensure that the maximum number of Sandy-homeowners are provided with the assistance they need through this updated HUD policy.
“Staten Island homeowners impacted by Sandy are now eligible for CDBG assistance, regardless of whether they were offered an SBA loan. I fought hard to make sure HUD’s original adverse policy was changed and now all Sandy-victims should sign up for New York City’s ‘Build it Back Program’ so they receive the assistance they need and deserve,” said Schumer. “At the same time, HUD should maximize the number of homeowners eligible for this assistance. It is unfair for HUD to be overly selective when it comes to the justification they are requiring New York City to make on a case by case basis.”
“This common sense rule change that my colleagues and I fought for ensures that Staten Island homeowners and families devastated by Superstorm Sandy who turned down SBA loans now have the opportunity to access critical CDBG funding,” said U.S. Senator Kirsten Gillibrand, who led a letter signed by NYC’s entire Congressional delegation to HUD Secretary Donovan urging for the rule change. “I will continue to work with HUD to maximize the number of homeowners eligible for desperately needed recovery aid under the ‘NYC Build It Back’ program.”
CDBG funding, which comes in the form of a grant, not a loan, is intended to supplement other available resources (including insurance), and cover only “unmet need.” In determining the amount of “unmet need,” HUD regulations initially said that any SBA loans for which a homeowner is approved are counted against the unmet need. “Duplication of benefits” was not permitted in connection with the provision of supplemental disaster assistance such as CDBG. HUD regulations provide that CDBG disaster assistance is supplemental in nature, and designed to cover “unmet needs”, i.e., needs not otherwise covered by insurance, Federal Emergency Management Agency (FEMA) Individual Assistance or any approved SBA disaster loans. Under these HUD regulations, 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, and are therefore deducted from the calculation of “unmet need”.
Schumer had made the case that these regulations did not take into account the individual circumstances of homeowners who may not be able to afford to take on more debt. In May, Schumer made a personal call to HUD Secretary Donovan and highlighted the negative impact of this policy, in particular because so many homeowners were initially encouraged to apply for SBA loans.
Earlier this month, Schumer announced that, after his push, HUD updated their guidance and now permit New York City more flexibility in determining whether applicants who have been offered SBA assistance but turned it down will have their eligibility for CDBG reduced.
Last week, HUD released their guidance on the duplication of benefits requirements and provision of CDBG Disaster Recovery assistance. According the guidance, New York City must have an approach that adequately establishes the basis for any CDBG assistance. New York City must determine whether an applicant declined an SBA loan offer, provide an analysis of a declined SBA loan and provide a determination that includes the reasons why the individual should receive CDBG assistance even though they were originally offered an SBA loan. Additionally, the guidelines say that “failure to institute an appropriate process to address these cases may open the grantee (New York City) to programmatic sanctions.”
Schumer today urged all homeowners who are victims of Sandy to now apply for New York City’s “Build it Back Program,” if they have not already done so. Schumer explained that many Sandy-victims may have not yet applied for this assistance because they were offered an SBA loan. Now that HUD has updated its policy and is now providing more flexibility, Schumer urged all homeowners to make sure they apply for these grants.
Schumer today also urged HUD to allow New York City the most flexible justification for CDBG assistance. Schumer explained that HUD requires New York City to provide a determination of why CDBG was awarded to the homeowner and HUD should allow the City to be as flexible as possible in these determinations to ensure that the maximum number of applicants benefit from this policy change
“It’s good news for cash-strapped Sandy victims that HUD is revising their policy that penalizes homeowners who simply couldn’t afford to take on any more debt, and who therefore prudently declined SBA loan offers. We need to maximize the support that hammered homeowners receive and this change paves the way for that to happen. The devil is in the details and HUD should make their individual determinations as flexible as possible,” continued Schumer.
