US to drop clawbacks on Sandy payments

The federal government is lifting the burden on Superstorm Sandy victims who were told they were on the hook after receiving too much relief money.

The Department of Housing and Urban Development says it will not look to take back duplicate benefits up to $20,000 already paid to homeowners. The department says that some people twice received benefits from the National Flood Insurance Program and FEMA.

"As soon as I got the money, I spent it," says Tom Cohill, of Amityville.

He, like many residents who received the funds, dumped thousands into rebuilding homes destroyed in the storm.

Many Sandy victims say that the clawback was shocking because even after they received federal money, they still did not have enough to complete repairs.

The issue arose when a FEMA investigation concluded that many homeowners had indeed been underpaid. 

The agency reopened claims, but during the process, the Department of Housing and Urban Development was required by law to ask that duplicate claims be paid back. 

Federal officials -- who have the power to decline to enforce the clawback rule -- changed stance Wednesday, offering homeowners relief.

FEMA has also extended its deadline for homeowners to challenge their flood damage claims by 30 days. It will review the claims of homeowners who think they were underpaid or were wrongfully rejected.

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