Kane In Your Corner: Superstorm Sandy victims told to repay federal grant money

Some Superstorm Sandy victims have been told they have to repay federal grant money. Caption Some Superstorm Sandy victims have been told they have to repay federal grant money. Caption

Some New Jersey homeowners are being ordered to repay tens of thousands of dollars in Sandy grant money after they accepted government-backed loans that the Federal Emergency Management Agency encouraged them to apply for, and a FEMA spokesman promises Kane In Your Corner the agency will work harder to ensure that homeowners understand the often-confusing rules.

Fred and Marjorie Schaffer's home in Little Egg Harbor was damaged so badly during Sandy that it could not be saved. Thanks in part to a $150,000 Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) grant, they were able to move into a new modular home. When the work was finished, the state of New Jersey even listed the family as a "success story" on its Sandy Recovery website.

But Fred Schaffer doesn't feel like his story is much of a success. The state recently sent him a letter, on behalf of FEMA, demanding that he repay $115,000 of his RREM grant. Schaffer also accepted a loan from the Small Business Administration, which the federal government considers a "duplication of benefits." The rules are intended to make sure homeowners only get the help they need and don't profit from disaster relief, but Schaffer doesn't understand why they apply to him.

"How can it be a duplication of benefits?" he wonders. "I didn't get (the SBA loan) for free. I'm paying it back every month for the next 30 years."

Sue Marticek with the Ocean County Long Term Recovery Group says she's heard the same complaint from many homeowners. "Many don't understand to this day how getting a loan from the SBA is considered a duplication of benefits," she says.

Some homeowners are also upset because they believed they were just doing what FEMA wanted. In the weeks after the storm, FEMA personnel around the state advised Sandy victims to fill out SBA loan applications. FEMA spokesman Bill MacDonald says the advice was good, since the applications also served as the first step in the grant process. He says, unfortunately, some homeowners were either not told or did not understand that if they actually accepted a loan, the proceeds would count against any future grant money.

"I understand that is confusing to people," MacDonald says, adding that FEMA understands "we are going to have to improve our outreach."

For Fred Schaffer, now having to repay $115,000 in grant money, that's not much comfort.

On Thursday, Kane In Your Corner takes a closer look at "duplication of benefit" rules and what a homeowner can do when a recoupment letter arrives.

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