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HUD Drops Rule That Would Have Forced Sandy Victims to Pay Back Benefits

By  Nicholas Rizzi and Katie Honan | September 16, 2015 5:08pm 

 HUD announced it would no longer require the repayment of
HUD announced it would no longer require the repayment of "duplicate" benefits for one-third of owners whose homes were damaged in Hurricane Sandy.
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DNAinfo/Katie Honan

NEW YORK CITY — The federal Department of Housing and Urban Development announced on Wednesday that it would not require the repayment of Build it Back funds from most Hurricane Sandy victims.

HUD said it would change rules that required the repayment of "duplicate" benefits for victims who got up to $20,000 in additional compensation from FEMA after the storm — sparing about one-third of storm-ravaged homeowners from having to pay back the funds.

"These families have suffered enough and shouldn’t be further victimized through no fault of their own," said Harriet Tregoning, deputy assistant  Secretary for Community Planning and Development for the agency, in a statement.  

"We have a larger responsibility to facilitate recovery, not to hinder it just because these families didn’t receive sufficient flood insurance payments."

Under the old HUD rules, about 3,000 New Yorkers in Build It Back would have been required to pay back funds used for repairs if they reopened their claims, the New York Daily News reported.

If FEMA found homeowners were owed more money than originally assessed, they would have been required to repay Build It Back funds because it was only supposed to be doled out after their insurance payments were depleted.

"This will allow homeowners who have received FEMA flood insurance proceeds to continue focusing on what is most important — building back better and stronger with the next storm in mind," Gov. Andrew Cuomo said in a statement.

HUD officials said they overturned the rule for "duplicate" payments after thousands of homeowners reported originally receiving insufficient funds because FEMA contractors allegedly underreported damage to their homes.

"Under normal circumstances, federal agencies should of course strictly enforce rules to limit benefits duplication. In this case, though, Sandy victims have been put through the ringer: fraudulent engineering reports, nonsensical SBA loan regulations, and constantly changing guidelines — all caused by government bureaucracy," Rep. Dan Donovan said in a statement.

"HUD’s rule change finally places the victim first."

Victims who received more than $20,000 in additional payments will still need to have their cases re-examined to see if they would need to repay the funds, HUD said.

Aside from the rules change, Sandy victims got another break on Wednesday with FEMA extending the deadline for them to review their claims from Sept. 15 to Oct. 15.

"That process is working and putting hard-earned dollars back into the pockets of Sandy victims and that is why I fought so hard to see it put in place," Sen. Charles Schumer said in a statement. "An extension makes sense and will allow more homeowners who feel like they have been shortchanged to be made whole."