Gov. Edwards demands HUD secretary provide interpretation of Duplication of Benefits penalty
BATON ROUGE -- Gov. John Bel Edwards reiterated a previous request to federal officials demanding interpretation of the Duplication of Benefits penalty, one of the biggest roadblocks to Livingston Parish and other areas working to recover from the flood events of 2016.
In a letter to Housing and Urban Development (HUD) Secretary Ben Carson, Governor Edwards requested that the secretary and his agency provide a final interpretation of the language related to the federal Duplication of Benefits (DOB) penalty included in the Bipartisan Budget Act of 2018.
“It is critically important that HUD correctly interprets Congress’ intent in this law and allows your grantees to offer grants to these homeowners for their remaining unmet rebuilding needs, ignoring SBA loan amounts that they never drew down,” Gov. Edwards wrote in the letter. “As we continue to rebuild from the floods, this remains the single greatest complaint for homeowners. Therefore, I am respectfully requesting guidance from your agency regarding your interpretation of this new law and how you intend to implement it.”
Congressman Garret Graves made a similar demand last week during his address to the Kiwanis Club of Denham Springs, in which called the current policy "ludicrous."
"A grant and a loan are two entirely different entities -- a loan is something you have to pay back," he said. "I'm not in the banking industry, and I can tell you that."
Currently, flood survivors who applied for SBA loans immediately following the disaster are not able to make full use of grant funding available through the RESTORE Louisiana Homeowner Assistance Program.
The Federal Emergency Management Agency (FEMA), in the immediate aftermath of a disaster, insists that survivors apply for a SBA loan without fully disclosing that they could be penalized down the road. For example, a homeowner who was eligible for a $90,000 SBA disaster loan, but perhaps only borrowed $30,000 immediately following the disaster, would be penalized in the grant program for the full amount of the loan.
The federal government labels this scenario as a Duplication of Benefits (DOB). This is also the case if a homeowner borrowed $0. That homeowner is still penalized for the full $90,000.
The Bipartisan Budget Act of 2018, which President Trump signed into law on February 9, 2018, includes language related to Small Business Administration (SBA) loans to homeowners as a duplication of other federal assistance.
By inclusion of the language, Congress clearly intended to modify the current approach of federal agencies, including HUD, of counting all approved SBA loan amounts as a duplication of benefits against homeowners impacted by disasters.
To read the entire letter, click on the link below: