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Gusciora Unveils Legislation to Protect Sandy Victims from Terrifying “Clawback” Process

Veteran Legislator Proposes Clear Process to Protect Homeowners from Financially Ruinous Payback Demands by State, Mediate Funding Disputes

Assemblyman Reed Gusciora unveiled legislation Thursday 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 fall legislative hearing Gusciora held on the anniversary of the historic storm.

Gusciora was joined by a number of Sandy victims who have had their funding “clawed back,” as well as Amanda Devecka-Rinear from the New Jersey Organizing Project – a regional network of volunteers formed on the two-year anniversary of Superstorm Sandy to help victims combat the state’s well-documented failure to administer a majority of the $1.1 billion in federal HUD rebuilding funds – and Jessica Limbacher with Volunteer Lawyers for Justice, which represents Sandy survivors pro bono.

“As Chairman of the Regulatory Oversight, Federal Relations, and Reform Committee, I conducted a hearing on the continuing effects of Hurricane Sandy this past October,” said Gusciora (D-Mercer/Hunterdon). “One of the most disturbing things I heard 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.”

The committee’s hearing revealed that these requests for repayment, or “clawbacks,” were common. The Department of Community Affairs (DCA) would issue letters to homeowners whom it determined received too much aid under the programs, delineating how much they are expected to pay back, but without providing individuals any recourse.

Gusciora’s legislation would establish a clear process to mediate disputes between homeowners and the state resulting from aid given by the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM), and Low-to-Moderate Income (LMI) Homeowners Rebuilding Programs in the aftermath of the historic 2012 storm.

“Getting a letter that indicates you owe the state tens of thousands of dollars you don’t have is terrifying. It’s even more terrifying when there’s no explanation of why, no process to get assistance, and no option to set up a payment plan,” Gusciora explained. “The ultimate implication of this haphazard process is that if you default on your debt, you’ll lose your house. No one who accepted aid in good faith should have to live with that fear.”

The legislation, which is slated for introduction today, delineates a clear process by which the DCA will be required to notify any future homeowners to whom they over-disbursed. Furthermore, it would establish clear options for repayment, set limits on maximum monthly repayments based on income, and allow DCA to consider hardship conditions in the collection of debts. It also creates an appeals process by which individuals can petition DCA to cancel their debts.

“Generally, this bill is about making sure that both the DCA and homeowners have a defined, institutional process to resolve their disputes. It ensures that the state is repaid by those to whom it over-disbursed, 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 misguided and financially ruinous process currently in place ends with the passage of this bill,” Gusciora concluded.