In the aftermath of Superstorm Sandy, many business and homeowners were left with tough financial decisions as to how to rebuild their lives. Many were offered loans by the Small Business Association (SBA) but rejected them because they didn’t want to incur more debt.
Because of complex bureaucratic rules, business and homeowners who rejected the SBA loans are now being denied some resources, leading politicians like Senator Charles Schumer and Congressman Michael Grimm to press the Housing and Urban Development (HUD) into changing their rules, according to a press release.
Current HUD policy now demands that the amount of approved loans, including those who didn’t even accept them in the first place, are to be counted against the potential grant amounts they are eligible for in the upcoming distribution of the Community Development Block Grants. The justification of the complex rule that Schumer and Grimm are battling against was explained in the release:
Community Development Block Grant (CDBG) funding, which comes in the form of a grant, not a loan, is intended to supplement other forms of available aid, and cover only “unmet need.” In determining the amount of “unmet need,” HUD regulations provide that any SBA loans for which a homeowner is approved are counted against the of unmet need.
The problem with this regulation is that it does not take into consideration the circumstances that might have led someone to reject a loan in the first place. Schumer expressed concern that this policy will hurt people who need it most.
“This policy will punish these homeowners and HUD should do everything in it power to make sure these individuals are eligible for additional federal assistance,” said Schumer.
Schumer’s concerns were shared by Grimm, according to SI Live.