WASHINGTON, D.C. – U.S. Sen. John Kennedy (R-La.) and U.S. Department of Housing and Urban Development Secretary Ben Carson came to an agreement this week on important policy changes that will give homeowners and business owners impacted by the March floods in Louisiana more time to recover and rebuild.
HUD has agreed to extend the deadline for homeowners and business owners to receive reimbursement for rebuilding work. Sen. Kennedy also secured a commitment that HUD will begin the process of advising mortgage lenders about the Mortgage Insurance for Disaster Victims program and will extend the deadline for application.
“I want to thank Secretary Carson for his common sense and compassion on issues that are so important to Louisiana,” said Sen. Kennedy. “This flexibility is needed because it took time to put funding programs in place, and it takes time to recover from such a tremendous disaster. Louisianians impacted by this terrible flooding need all the help we can give them. This flooding was unprecedented.”
“Those affected by the flooding last March will continue to have the resources they need to get back on their feet,” said U.S. Sen. Bill Cassidy, M.D. (R-La.). “The entire Louisiana delegation will continue to work with Secretary Carson and the rest of the administration to help Louisiana families rebuild, recover and prosper.”
The Louisiana delegation has been working with Gov. John Bel Edwards to ensure that flood victims receive the assistance they need to rebuild. State and federal officials representing Louisiana have made flood relief a priority in conversations with the Trump administration. Last month, staff members of the U.S. Senate Appropriations Committee visited Louisiana to see the damage firsthand.
Full text of Sen. Kennedy's letter follows:
March 3, 2017
The Honorable Ben Carson
Office of the Secretary
Department of Housing and Urban Development
451 7th St. SW
Washington, D.C. 20410
Dear Secretary Carson:
Congratulations on your confirmation as the Secretary of the Department of Housing and Urban Development (HUD). It was a privilege to participate in your confirmation hearing in the Senate Banking, Housing, and Urban Affairs Committee, and I am very much looking forward to working with you on issues important to Louisiana.
I write to you today regarding the ongoing recovery from the historic flooding that devastated so many communities in Louisiana last year. Out of 64 parishes across the state, 56 parishes received federal emergency disaster declarations due to the major flooding events that occurred in March and August of 2016. The American taxpayers have always been generous to Louisiana in the aftermath of major disasters, and these flooding events are no different. Congress appropriated a total of $1.6 billion in disaster recovery Community Development Block Grants (CDBG) to assist Louisiana. These funds will help repair and rebuild homes, businesses, and schools, and ultimately give thousands of Louisianans their futures back.
As you and I discussed during your confirmation process, several legislative and regulatory hurdles are preventing Louisiana families from rebuilding their homes and fully recovering from this disaster. Your ongoing help could directly expedite relief for those 193,000 families negatively impacted from the misinterpretation of several federal regulations.
There are several important requests that I would like to bring to your attention:
- I respectfully request you to grant a waiver of regulations under P.L. 114-223 and P.L. 114-254 to reduce the low-to-moderate-income (LMI) HUD requirement from 70 percent to 50 percent. I also ask that your agency continue to provide technical assistance to the State of Louisiana to work towards this request to allow CDBG dollars to benefit additional families. There is a precedent for this type of action since this waiver was granted for Louisiana after Hurricanes Katrina and Rita.
- I respectfully request that you extend, by one year, the limitation on reimbursement for eligible application costs for single and multi-family residential structures and nonresidential structures for rebuilding work completed during the first year after the date of the disaster. As I mentioned previously, the first major flooding event last year occurred in March 2016 and proper programming and funding was not in place in a timeframe that allowed eligible flood victims to participate. Extending this deadline will ensure that the state can develop suitable programs to encourage homeowners and businesses owners to rebuild as soon as possible without fear of missing their chance to receive assistance because of this regulation.
- Homeowners are facing significant delays in receiving portions of their National Flood Insurance Program (NFIP) proceeds checks due to federal mortgage servicing guidelines. Ginnie Mae, Fannie Mae, and Freddie Mac are following Government-Sponsored Enterprise (GSE) servicing guidelines that are actually penalizing homeowners who choose to rebuild their homes themselves rather than hiring a third party, licensed contractor. The guidelines are forcing banks and mortgage companies that service these loans to require homeowners to hire a licensed contractor in order for the lender to release flood insurance funds. I would like to request that you examine this issue for a workable solution.
- Relief from the home-by-home environmental review requirement is a key priority to guarantee that as much disaster assistance funding as possible goes directly to flood victims. Site-by-site inspections in order to comply with the National Environmental Policy Act (NEPA) review can generate costs as high as $3,500 per inspection and is unnecessary for the homes that do not need total reconstruction. It is important to realize that while this process was designed with good intentions, it does not allow for a whole lot of common sense. Allowing the flexibility to exempt an inspection for a structure where the rehabilitation work will not have an environmental impact will only improve the recovery process. I am aware that you cannot waive this requirement, and it would need a legislative fix. Please know that I look forward to addressing this issue in the Senate.
- I respectfully request that you work across government agencies with the Small Business Administration (SBA) to address a critical duplication of benefits issue and work with SBA Administrator McMahon to alter the appropriate memorandum of understanding that will fix this problem. Many families are ineligible for CDBG funds because they accepted an SBA disaster loan in the weeks following the floods. I understand that the former HUD Secretary and SBA Administrator committed to working together to fix this issue.
- I respectfully request that you extend the application period for one year after the set expiration of the Mortgage Insurance for Disaster Victims (Section 203 (H)) program. Under current rules, anyone whose home has been destroyed or severely damaged in a presidentially declared disaster area is eligible to apply for mortgage insurance under this program. However, the borrower's application for mortgage insurance must be submitted to the lender within one year of the President's declaration of the disaster. This date is rapidly approaching for both disasters. I would encourage you to quickly extend the deadline to give the state as many venues for assistance and programming as possible.
I personally appreciate your attention to these serious requests and look forward to discussing common sense solutions so that bureaucracy does not impede the recovery process. Our country is lucky to have your leadership at HUD. Thank you for your service to America.