NJ won't take back Sandy victims' RREM money

A comprehensive review of flood insurance claims from superstorm Sandy was greeted as a potential windfall for homeowners who believed they had been woefully underpaid and abandoned by their insurers.

But several unresolved issues — all centered around whether or not the effort to rehash the claim would be worth the return — have suppressed enrollment in the Sandy Claims Review.

Now, after multiple inquiries from the Asbury Park Press, the state is making its position on one of those unanswered questions clear: They will not seek to take back from homeowners new insurance money that overlaps with the Rehabilitation, Reconstruction, Elevation and Mitigation (RREM) program.

"The Christie Administration believes that FEMA ... is responsible for addressing any duplications created by additional flood insurance payments received," said Lisa Ryan, a spokeswoman for the New Jersey Department of Community Affairs. "If a RREM homeowner receives additional flood insurance dollars as a result of FEMA's review of their claim, DCA will not independently pursue recapture of RREM grant funds in these instances."

RREM awards are calculated using several factors, such as the cost to rebuild, flood insurance proceeds and public assistance received. The grants can be as high as $150,000 per eligible homeowners to repair, rebuild or lift their Sandy-damaged home.

Previously, the state's official position was that U.S. Department of Housing and Urban Development rules required New Jersey to circle back and check to see if a homeowner received more cash from insurance while in the RREM program. If they did, that could change the calculation — revising it downward — which would compel the state to collect any portion of the grant that was displaced by the new insurance money.

This shift in policy appears to apply only to RREM and not other programs, such as SBA loans, where an overlap might also exist.

What to do

To take advantage of this change, a RREM recipient has to take action to bypass the DCA when their Sandy claim is settled. The Federal Emergency Management Agency, which backs nearly all flood insurance in the U.S., provides this option.

A New Jersey policyholder who qualifies for additional payment through the Sandy claims review process — which is open until Sept. 15 — will be presented with the option of removing the DCA as a party to the resulting insurance check, according to a FEMA spokesman.

With New Jersey's name off of the check, the state would then need to recapture those funds — something it has now declined to do — if it wanted to collect them, rather than just exercising its right as a payee.

This unknown — whether or not any additional insurance proceeds would ultimately be gobbled up by the state in the name of "duplication of benefits" — has shaped weary homeowners' decisions on whether or not to sign up for another look at their Sandy claim.

In March, FEMA announced that as many as 142,000 Sandy victims would get a second chance at making a flood insurance claim if they felt they had been cheated by their flood insurance provider. About 73,000 of those victims live in New Jersey.

Despite those large figures, only about 9,000 claims are being reviewed, according to FEMA figures from July 22.

Still skeptical

Chuck Appleby, of Seaside Park, remains dubious that he won't be required to pay back some or all of any new insurance payout.

"I filed for additional (flood insurance)," Appleby said. "If they do offer me money, my lawyer will need to get paid and then I will see what is left after the RREM closeout. ... (It's) unknown if I will get additional funds to finish the painting, tilework or to reimburse me for paid housing expenses the current RREM applicants are now getting."

HUD, for its part, is much less definitive in response to how it's addressing this question, telling the Press that they are working with FEMA and New Jersey on the duplication of benefits issue.

"(HUD) is committed to a fair and rapid resolution of this unique and unfortunate situation," reads a statement from the department, which has so far provided $1 billion in disaster aid to New Jersey.

Russ Zimmer: 732-557-5748, razimmer@app.com

How many people are having their Sandy flood claims reexamined?

When the Sandy Claims Review process was announced, its architects said nearly 142,000 flood insurance claims could potentially get a second look — and maybe more cash. With less than two months remaining to opt into the review, 13,000 policyholders have inquired.

Calls to the call center or applications downloaded online: 12,999

Policyholders determined to be eligible: 9,407

Claims being reviewed: 9,022

Source: Federal Emergency Management Agency, figures from July 22