Tag: loans

“In a big emergency, FEMA will be there to help.”

You’d think that after what happened after Katrina, all of us would be tuned in to the role that FEMA plays to help with disaster recovery.

Apparently, we’re not.

Some recent headlines got my attention and prompted me to take a closer look at FEMA. Check these out:

• Louisiana: Some who sought FEMA assistance after Katrina being forced to pay back ‘debt’
• Iowa: ‘Serious Risk’ Federal Flood Protection Money Not Coming
• New Jersey: Hurricane Sandy Anniversary 2014: Billions Of Dollars In Federal Aid Still Unpaid

If you are counting on government money after a disaster, you’d better keep reading.

This article is not meant to give you legal or financial advice. You need to check with your own state’s emergency management agency for details. Still, the examples we’re providing raise some pertinent questions.

Question #1: Who gets FEMA money after an emergency?

FEMA money is meant to help two major groups: local governments and local citizens.

Before any money starts flowing after a disaster, though, there’s a procedure to follow. The FEMA website describes it this way:

1. Local Government Responds first, supplemented by neighboring communities and volunteer agencies. If overwhelmed, it turns to the state for assistance;
2. The State Responds with state resources, such as the National Guard and state agencies;
3. Damage Assessment by local, state, federal, and volunteer organizations determines losses and recovery needs;
4. A Major Disaster Declaration is requested by the governor. It describes the damage and agrees that the state will commit state funds and resources to the long-term recovery;
5. FEMA Evaluates the request and recommends action to the White House based on the disaster, the local community and the state’s ability to recover;
6. The President approves the request (or FEMA informs the governor it has been denied). This decision process could take a few hours or several weeks depending on the nature of the disaster.

So that’s the process. Disaster recovery is designed as a partnership between the state and the Federal Government. If the state doesn’t want to play, the government won’t play either.

And, even when a request goes through the process and is approved, that doesn’t seem to mean the funds always arrive as anticipated.

In 2014, for example, Congress authorized $73 million for flood protection for Cedar Rapids, IA (things like flood walls, levees and pump stations) but never appropriated the money.

Even though both New Jersey and New York suffered roughly the same amount of damage from Hurricane Sandy in late 2012, New York has received over $7 billion in assistance and New Jersey has received only $1.7 billion.

If you live in either of these places, you have to ask “Why?”

Question #2: What can FEMA money be used for?

First, FEMA money can be used for “public assistance,” which is money aimed as repairing a community’s infrastructure – roads, bridges, buildings, schools, etc. FEMA can pay for 75% of the costs; the state is required to come up with the rest of the money.

Individuals apply for – you guessed it – “individual assistance.”

Disaster aid to individuals generally falls into the following categories:

• Disaster Housing, available for up to 18 months, for people whose homes were damaged or destroyed. Funding also can be provided for housing repairs to make them habitable again.
• Disaster Grants can help replace personal property and provide money for transportation, medical, dental and funeral expenses.
• Low-Interest Disaster Loansare available after a disaster for homeowners and renters from the U.S. Small Business Administration (SBA) to cover uninsured property losses. Loans may cover repair or replacement of homes, cars, clothing or other damaged personal property. Loans are also available to businesses for property loss and economic injury.
• Other Disaster Aid Programs may supplement state or local help with counseling, unemployment assistance, legal aid and assistance with income tax, Social Security and Veteran’s benefits.
• Assistance Process– After you apply, your damaged property will be verified. If you are approved, you’ll get a grant for rental assistance. A loan application requires more information and it may take weeks for it to be approved.

The deadline for applying for most individual assistance programs is 60 days following the President’s major disaster declaration.

This leads us to question #3.

Question #3: Why would some people be forced to pay back FEMA money?

After FEMA funds have been approved and distributed, the program is audited. Through the audit, FEMA is looking to “recoup” funds that have been issued to the wrong people or used incorrectly.

First, FEMA is looking for duplicated payments. This is where the homeowner has received money from both their insurance company or from an SBA loan and from FEMA — for the same purpose.

Second, auditors look for ineligible uses. This is where the recipients of FEMA money have used it for unintended purposes. For example, a recipient got money to repair the home and used it, instead, to pay off the existing mortgage.

In some cases, months after the disaster and receipt of FEMA funds, residents receive letters seeking “recoupment.” These letters are reported to threaten legal action, negative reports to credit agencies, property liens, and impacts on residents’ future eligibility for federal disaster assistance if they fail to pay.

A couple of examples:

FEMA has so far determined that $34.7 million given to Floridians for recovery from the 2004 hurricanes was improperly spent and must be repaid,

And in 2014, over 1,000 New Jerseyans still displaced from superstorm Sandy started receiving letters from FEMA telling them they had received too much money and would have to pay it back.

If anyone tells you to count on FEMA as your disaster plan, you may want to pause before you believe it.

Aren’t you glad you read this far?!

Virginia
Your Emergency Plan Guide Team

If you have any experiences with FEMA to share, good or bad, please do!

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