U.S. Senator Mark Pryor announced today that FEMA now has clear authority to waive debt owed to the U.S. in which disaster assistance funds were distributed in FEMA error. The measure was included by Pryor as part of the spending budget signed into law by President Obama over the weekend.
"Following severe flooding three years ago, many families in Arkansas underwent FEMA's extensive application and inspection process in order to rebuild and recover. They filled out all the paperwork and did everything right, but FEMA made mistakes in paying out assistance. Now, the agency is demanding repayment from these families," Pryor said. "My provision simply allows FEMA to back down in cases where the agency is at fault."
Pryor said FEMA has been aggressively pursuing repayment by certain individuals who received disaster assistance several years ago. As much as $643 million was mistakenly released to individuals who applied for disaster assistance but were not eligible to receive the funds. The provision, now law, allows the Administrator of FEMA to waive full debt owed to the U.S. in which funds were distributed in FEMA error in situations where recoupment would be against "equity and good conscience." Individuals earning more than $90,000 a year are not eligible for debt forgiveness.
Pryor initially learned about FEMA's collection efforts from an elderly couple in Mountain View, Arkansas. In 2008, after completing an extensive application process and home inspection, FEMA approved $27,000 in disaster assistance for home repairs. Three years later, FEMA informed the family they were never eligible for assistance and that they must repay the funds within 30 days or face high interest charges or other collection actions. Their debt was later sent to the Treasury for collection with an additional $10,000 in fees. Pryor helped Treasury officials and the family reach a favorable settlement. According to FEMA, similar "Notice of Debt" letters were sent to 122 additional Arkansas households. The 123 Arkansas households owe a combined total of $795,308.