Gusciora, Muoio & Eustace Bill to Protect Sandy Victims from ‘Clawbacks’ Clears Legislature

Gusciora, Muoio & Eustace Bill to Protect Sandy Victims from ‘Clawbacks’ Clears Legislature


(TRENTON) – The full Assembly on Monday approved 67-0 legislation sponsored by Assembly Democrats Reed Gusciora, Elizabeth Maher Muoio and Tim Eustace establishing protections for struggling Superstorm Sandy victims who are forced to repay rebuilding funds that were already disbursed to them, an issue that came to light during a legislative hearing Gusciora held on the anniversary of the historic storm.

The bill now goes to the governor.

The committee’s hearing revealed that requests for repayment, or “clawbacks” as they are known, were common during the state’s well-documented failure to administer a majority of the $1.1 billion in federal HUD rebuilding funds.  The Department of Community Affairs (DCA) would issue letters to homeowners whom it determined received too much aid under the programs, outlining how much they are expected to pay back, but without providing individuals with any other recourse.

“One of the most disturbing things we heard during our fall hearing on the anniversary of Sandy was that some individuals who had received state aid in order to rebuild their lives and homes in the wake of this terrible storm, were being asked to pay back some or all of the money without any clear process for mediation,” said Gusciora (D-Mercer/Hunterdon), who chairs the Regulatory Oversight, Federal Relations, and Reform Committee.  “This bill is about making sure that both the state and homeowners have a defined, institutional process to resolve their disputes so that already beleaguered homeowners aren’t subjected to more nightmares.  The misguided and financially ruinous process currently in place ends with the passage of this bill.”

“Imagine getting a letter, while you’re in the midst of trying to rebuild your life, that indicates you owe the state tens of thousands of dollars you don’t have,” said Muoio (D-Mercer/Hunterdon).  “Not only is it terrifying, but when there’s no explanation and little recourse provided, it becomes a nightmare.  No one who accepted aid in good faith should have to live with that fear.”

“It’s infuriating that nearly five years after Sandy hit, we are still trying to clean up the administrative mess created by the state’s mishandling of funding disbursement,” said Eustace (D-Bergen/Passaic).  “This bill will establish a fair process for the state to be repaid with the ultimately goal of ensuring that repayment doesn’t financially ruin homeowners and that those who continue to suffer extreme hardship as a result of the storm are protected.”

The newly revised bill provides for a single payment plan for over-disbursement debt of Sandy-affected homeowners. The bill originally set forth a standard payment plan and non-standard payment plan, the eligibility for which was determined by net disposable income. Under the amendments, DCA would provide a payment plan to all Sandy-impacted homeowners to repay any over-disbursement debt either in lump-sum or in 60 months, paying as much or as little as they choose per month, over the course of the repayment period until the debt is satisfied. At the end of 60 months, any remaining debt would be transferred to the Division of Revenue and Enterprise Services in the Department of Treasury.

The amendments provide that in cases when over-disbursement was made to a Sandy-impacted, low income or moderate income homeowner, as the equivalent terms are defined by the United States Department of Housing and Urban Development, and the homeowner does not have sufficient income, assets, or resources to make payments, the homeowner may request to have some or all of the over-disbursement debt compromised.  In such a case, DCA would determine whether a low-to-moderate income Sandy-impacted homeowner does not have sufficient income, assets, or resources to make payments. If that determination is made, the over-disbursement debt, except for any portion of the debt the debtor can pay through disposable assets, would be compromised in whole or in part.

Under the amendments, in making the determination, DCA would evaluate the homeowner’s assets, income, and reasonable living expenses to determine whether the homeowner can pay the debt. Additionally, when determining the ability of a low-to-moderate income Sandy-impacted homeowner to repay the debt, DCA may consider the homeowner’s age, health, financial hardship, and other extraordinary circumstances as determined by the Commissioner of Community Affairs.

The amendments also specify that any Sandy-impacted homeowner who received an over-disbursement of RREM  or LMI funds, and for whom a Final Grant Reconciliation Document has been signed by DCA or who has repaid an over-disbursement debt either in whole or in part, may appeal the DCA’s determination in writing.  Finally, the amendments require that information about the appeals process be placed on DCA’s Internet website.

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