Homeowners May Lose Potential Federal Grant Aid After Applying For Disaster Loans

Homeowners may be faced with a “duplication of benefits” penalties after applying for loans. U.S. Rep. John Culberson’s office says he is “exploring legislative solutions so that Houstonians do not experience this issue.”

By Davis LandSeptember 18, 2017 9:30 am| , , ,

From Houston Public Media:

Texas homeowners are faced with a choice when rebuilding their flooded homes: Take a disaster loan now from the Small Business Administration (SBA) or wait for Congress to give Texas grant money.

But applying for a loan could mean facing a “duplication of benefits” penalty later.

Homeowners are often encouraged to apply for an SBA loan following a disaster, but if they do, they may not be able to receive the entirety of a federal grant that becomes available later on.

Even if a homeowner doesn’t take the loan he or she applied for, FEMA will still subtract the loan amount the homeowner qualifies for from any potential grant money.

Lousiana Gov. John Bel Edwards urged Congress to “clarify” federal provisions regarding duplication of benefits penalties in a letter last week to House and Senate leaders. Many Louisianans were faced with such penalties after flooding last year.

U.S. Rep. John Culberson’s office says he is “well aware” of the problem and is “currently exploring legislative solutions so that Houstonians do not experience this issue.”