HUD to ease rules for Sandy victims

Policy changed after residents denied CDBG aid because they rejected SBA loans


Weeks after U.S. Sen. Charles Schumer and the Long Beach City Council called on the U.S. Department of Housing and Urban Development to waive a policy that is prohibiting many Hurricane Sandy victims from obtaining much-needed federal aid, Schumer announced on Thursday that HUD will issue new guidelines that could provide relief for homeowners.

City officials said that victims who are hoping to receive federal Community Development Block Grants (CDBG) through the new state-run Sandy funding program, NY Rising, but turned down Small Business Administration (SBA) loans that they were approved for because they could not afford to take on more debt, are being denied grant assistance.

CDBG funding is intended to supplement other available resources and cover only unmet needs. The program provides homeowners, renters and business owners with grant money to defray repair costs that are not covered by the Federal Emergency Management Agency, the SBA or flood insurance.

The state was given $1.7 billion for the NY Rising program, $838 million of which is to be allocated to housing. Residents said they had heard from program representatives that they could receive as much as $150,000 if they qualified. However, HUD regulations state that any SBA loans for which a homeowner is approved are counted against them even if they opted not to take on the loans.

In May, Schumer and Gilligrand called on HUD Secretary Shaun Donovan to revise the policy, saying that many homeowners were initially encouraged by the Federal Emergency Management Agency to apply for SBA loans. They also said that the regulations did not take into account the individual circumstances of homeowners who may not be able to afford to take on more debt.

Schumer said on Thursday that HUD will issue additional guidance permitting grantees of CDBG assistance more flexibility in determining whether applicants who have been offered SBA assistance but turned it down are eligible. The policy change will also clarify that homeowners are not required to accept SBA loans as a prerequisite to receiving CDBG funding.

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