Over the last few years, the Federal Emergency Management Agency has not made many friends. In March, the agency started sending out letters to 5,560 recipients of federal aid, requesting repayment. One senator has already floated a bill that would roll back these payments.
FEMA requesting repayments
In the last few months, FEMA has sent letters to more than 5,500 recipients of FEMA funds. These repayment requests range from $500 to $50,000, depending on the amount originally paid out. The letter indicates that the recipient has 30 days to pay back the full amount or interest will start accruing. The letters have only gone out to individuals who received money due to an error by FEMA, human error or database error. FEMA is required to try to recoup taxpayer money that was paid out in error.
Fraud not included in FEMA repayments
The requests for repayment of FEMA funds are intended to address improper payments to homeowners. Some of these payments were duplications of homeowners’ policies, others were due to errors in home valuation. One thing that these letters do not address, however, is fraud. Homeowners or individuals who submitted fradulent claims to the Federal Emergency Management Agency are being handled separately. The homeowners receiving these letters likely had no idea they would be on the hook to pay thousands of dollars back to the government within a month. FEMA has a process available that allows the amount to be appealed or compromised, though interest starts accruing after 30 days.
Bill would close down recoup efforts
A bill written and presented by Sen. Mark Pryor of Arkansas would waive these debts. An act of Congress is the only thing that could shut down these debt collection efforts, as it is currently law that the agency must try to recoup these costs. The bill would entirely stop collection of these debts if the money was handed out on FEMA error, if there was no fraud or misrepresentation and if the collection would be “against equity.” The bill will have to make its way through Congress and be signed into law by the president before collections stop.
Senate information on FEMA Recoupment Program: http://landrieu.senate.gov/mediacenter/upload/femarecoupment.pdf
The Hill: http://thehill.com/blogs/floor-action/senate/162223-senator-floats-bill-to-forgive-disaster-debt-owed-over-femas-mistakes
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