For years, thousands of homeowners have been patiently waiting for HUD to decide on how SBA loans should be considered in duplicate of benefits for federal disaster assistance. Now, relief is on the way.
“So, we changed the law, we tried to work and change the policy, but we were unsuccessful, congressman Cedrick Richmond and I introduced legislation and we eventually changed the law. Now here we are 8 months after the president signed the bill into law and the agency is issuing guidance that explains the process the steps we have to go through in order for those people to get their checks” said Congressman Garret Graves (R).
Back in 2016, homeowners who were approved for an SBA loan after the flood declined or cancelled the loan.
“What these loans recipients were told, once they took a loan, they were ineligible for a grant.”
Congressman Graves says, this has been a long process and finally getting out what’s owed is a big deal.
“We’re talking over 7,000 families we’re talking near a quarter billion dollars that is owed, that will be distributed to these folks so it is a lot of money and the fact that we are nearing the third year anniversary of this disaster is just awful.”
Graves says, now that checks are going out soon, there’s also a bonus for some homeowners.
“A really good news item is that we were able to get the interest on your loan to be included as an eligible cost so if you took a loan it’s not just the principle on the loan you could potentially reimburse but also the interest payments as well which in some cases could be $10,000 so that’s good news.”
Friday, the Restore Louisiana Homeowner Assistance Program announced that the first round of checks will be issued on Monday, July 8, to some homeowners impacted by the long-awaited, June 14 guidance issued by the U.S. Department of Housing and Urban Development (HUD) regarding how Small Business Administration (SBA) loans should be considered in Duplication of Benefits (DOB) calculations for federal disaster grant dollars.
This first disbursement of grant funds will go to approximately 230 homeowners who were approved for an SBA loan, but declined or canceled the loan in its entirety and have already accepted and executed their grant agreement with the Program. Additionally, about 800 homeowners who declined or canceled their approved SBA loan in its entirety and received a grant determination, but have not executed their grant agreement, will receive notice of their increased award, adjusted to remove the entire SBA loan amount from their DOB calculation; the Program will work with these homeowners to finalize their updated grant agreements.
“Since the guidance was published a few weeks ago, we have been working with HUD to ensure the quickest possible delivery of funds to those homeowners who have been waiting so long for this assistance,” said Pat Forbes, Executive Director of the Louisiana Office of Community Development. “While I am proud of our work to expedite delivery of these critical recovery dollars to the flood-impacted homeowners who should have never been further victimized by this federal penalty in the first place, we understand that this process can never move fast enough. We are continuing to do everything we can to work with HUD and speed up the release of funds for more homeowners.”
For homeowners who drew down at least some of the SBA loan amount they were approved for, HUD’s guidance stipulates that the State of Louisiana must submit a substantial Action Plan Amendment (APA) to HUD for approval before Restore Louisiana can begin providing funds for repayment of SBA loan funds disbursed to homeowners. The Office of Community Development (OCD) is writing the required APA based on the recent HUD guidance and plans to publish it within a week.
Once the APA is approved, which is estimated to take up to three months, the Program expects to be able to provide funds for repayment of the drawn down amounts of SBA loans for all households at or below 120 percent AMI.
For those households with income above 120 percent AMI, HUD’s guidance requires that they demonstrate a “hardship” to be eligible for the reimbursement portion. In addition, HUD’s guidance stipulates that the Program must ensure that at least 55 percent of all grant funds go to the benefit of low to moderate income (LMI) households. This federal requirement may result in only partial reimbursements of SBA loan funds that were drawn down for those households with income above 120 percent of AMI.
In the coming weeks, Restore Louisiana will send a survey to homeowners that will assist OCD in developing a broad and inclusive set of criteria for the hardship exception. The criteria for a hardship exception must be approved by HUD as part of the APA. HUD must then approve homeowners’ financial hardship justification on a case-by-case basis.