No shelter from the storm: Stymied by rules and paperwork, homeowners struggle to recover from Sandy

Confused by construction codes, overwhelmed by the paperwork required to collect insurance payments, and unable to afford a contractor, many homeowners who suffered loss or damage during Hurricane Sandy are terrified of financial ruin and too paralyzed to repair or rebuild.

Even after Gov. Chris Christie blasted the pace of the National Flood Insurance Program (NFIP) and announced new regulations and financial aid packages last week many of Sandy’s victims still can’t or don’t know how to move forward.

“At first there was no information. And now that it’s there, the reality has sunk in that nobody has any answers,” said Faith Liguori, a trained disaster-response counselor who’s staying in a friend’s summer cottage after losing the first floor of her house in Seaside Park.

“Every time you think you can take a step back to your home there’s another setback,” she added.In many ways, Liguori, the former head of Ocean County’s Department of Human Services, is luckier than most. She has a temporary place to live, a job, and a smartphone loaded with resources. But despite her connections and experience, she’s dumbfounded by the lack of answers and conflicting instructions.. She can’t imagine how victims with less money and knowledge of the system deal with the same obstacles.

Liguori’s experiences are far from atypical. The situation is unraveling all across the storm-ravaged parts of the state.

For starters, Liguori’s insurance company sent her an advance check at the end of last year, but it took her mortgage company, which ultimately releases the funds, two-and-a-half more months to let her cash it. After several rounds of faxed, rejected and refaxed forms to approve her proposed contractors and their estimates, Liguori received $20,000. She used to remediate mold, strip her first floor and garages down to the studs, and hire an electrician to cap exposed wires. The check ostensibly included money to replace damaged appliances and other fixtures but only covered what they were worth when she bought them — about half of what they cost to buy new.

Starting at Square One

With the advance check cashed and spent, Liguori’s saga — and that of owners of the 346,000 damaged or destroyed housing units in the state — is far from over.

She’ll next turn her attention to figuring out how to elevate her house, a project she estimates will cost between $80,000 and $100,000. She’ll launch that fight in earnest once she receives a damage assessment report from her insurance adjuster, who she says has made no contact with her since his visit two months ago. Then she’ll wait longer for her municipality to decide whether she’ll need to raise her house, and if so, how high.

She’s spent most of her free time and hours of work time navigating this maze. That includes her first day back on the job, when her insurance adjuster phoned to inform her that she needed to meet him at her house in two hours — or weeks would pass before he could return.

Equally frustrating, she’s turned to the Federal Emergency Management Agency (FEMA) for the guidance they continually promise, but instead of answers, officials with whom she’s spoken have done little more than hand some 50 different brochures.

“It’s mind-blowing what they expect you to read, understand and assimilate, and then put a plan into place,” Liguori said.

FEMA recommends calling its hotline or attending municipal townhall meetings with its representatives. Several state agencies have printed detailed FAQs for homeowners on all aspects on storm recovery, with the Department of Environmental Protection (DEP) promising weekly updates.

Christie, for his part, has announced four potential sources of help for weary residents in the past three weeks: an extension through February 22 of FEMA’s transitional housing assistance; expedited claims-processing requirements for private insurers; U.S. Department of Housing and Urban Development (HUD) block grants for residential and commercial mitigation, reconstruction, and repair; and emergency regulations to streamline the residential reconstruction permitting process and eliminate its fees.

Putting Insurance Companies on Notice

Last week, Christie informed private insurance companies that they now must respond to consumer-originated questions from the Department of Banking and Insurance (DOBI) within five days instead of 15. And they’re now allowed just one deadline extension instead of an unlimited number. Department spokesperson Marshall McKnight says no one should interpret the new edict as a criticism of the industry’s response to the storm. Despite common perception, he says, private insurers have acted efficiently, closing 89 percent of their cases as of February 1.

McKnight reiterates Christie’s assertion that it’s the FEMA flood insurance program that’s slower to pay, as indicated by its 37 percent close rate. But FEMA has disputed that statistic , countering that it’s closed more than half of its New Jersey cases and has issued expedited checks for partial and advance payments.He adds that when it comes to homeowners insurance, dissatisfied policyholders like Liguori can call on his department to intervene on their behalf.

Meanwhile, Liguori, who carries four bags of paperwork in her car for immediate access any time yet-another agency asks for yet another piece of documentation, can’t fathom why, for instance, her mortgage company demanded a W9 form and a lien waver from her contractors, as well as insurance company affidavits singing off on contractors’ fees.

McKnight says these are standard industry precautions to prevent fraud and abuse. “It’s in their best interest that these payments aren’t being given to people who will act unscrupulously. We’d rather see fraud prevented rather than go after the fraudsters after the fact,” he said.

Help from HUD

A week ago, Gov. Christie announced $1.83 billion in block grants funded by HUD, the first of three allocations totaling $16.4 billion awarded to New Jersey, New York, and Connecticut as part of the $60 billion package approved by Congress for Sandy relief last month. With the help of consulting firm CDM Smith, Department of Community Affairs (DCA) Commissioner Richard Constable will work with the Administration to propose a spending plan for the grants, which he anticipates will begin funneling to residents through his department this spring.

In announcing the grant program, Christie said he plans to give most of the initial funds to homeowners who need to bridge the gap between private insurance payouts and the actual cost of rebuilding. But he faced criticism for promising to siphon some of the funds to reconstruction costs for small business owners and a marketing campaign to promote the Shore this summer.

Christie also generated controversy for failing to mention renters and poor residents in his plans. But Constable says that despite the omission, HUD requires the state to use at least half of the grant money for low-income housing, a figure he promises his office will beat.

“Fifty percent has to go to poor folks, even though we’re going to give much more,” said Constable. He added that he anticipates “an overwhelming majority” of the funds will benefit low-income residents, even if that means incentivizing the program so that owners of rental properties may qualify for a grant only if they rent a percentage of their rebuilt units at affordable-housing rates.

Scaling the Heights

But none of the foregoing funding may be enough for homeowners who must or who choose to elevate their homes — and have to figure out how to finance it. Because FEMA’s years-in-the-making base flood elevation maps hadn’t been completed before Sandy struck, the agency released provisional Advisory Base Flood Elevations, which can vary parcel by parcel, to help guide frantic homeowners who need to rebuild before getting back into their homes.

In January, Christie adopted the provisional maps. He also reiterated an existing requirement to add one foot to FEMA’s minimum height specifications, to allow for differences between the provisional and final maps — and encouraged municipalities to do the same. He also waived the need for permits and fees for complying homeowners whose damage is substantial, meaning repairs will cost 50 percent or more of the building’s pre-damage market value. These are the only homeowners who will be forced to elevate when and if they rebuild.

So far, most municipalities have yet to decide whether to enforce the new maps or rely on the old ones, which date back decades. While this would only affect the permitting process in the unlikely case that a town enacts height minimums that are higher than the state’s, it does mean that homeowners don’t know whether they’ll qualify for related federal grants. Only residents in adhering localities are eligible. And some homeowners, tired of waiting, rushed ahead and rebuilt before anything had been codified.”I know people who raised their houses two to three feet and are now finding out that’s not high enough,” Liguori said. “Now you’re waiting for towns to adopt the FEMA flood map, but if they say you can do something and then it turns out to be different once FEMA finalizes its map, do you sue the town for making you incur additional costs?”

And even though all state agencies are aligned with FEMA, Liguori says that doesn’t mean her mortgage company is on board.

“My mortgage company said it’s their policy to only allow us to put our houses back the way they were. I don’t think these mortgage companies understand the magnitude of what’s happening on the east coast,” she said.

Liguori thinks she’s hovering on the border of that 50 percent benchmark. If she didn’t receive substantial damage, she can choose not to elevate her home. But the costs will come later, when her flood insurance rates could go as high as $31,000 per year.

“I will devalue my house if I put it back the same way because no one can afford that kind of insurance,” she said.

If Liguori is found to have sustained substantial damage, she could qualify for FEMA’s Increased Cost of Compliance (ICC) coverage, which provides up to $30,000 to flood-policy holders in high-risk areas who want to elevate, relocate, demolish, or floodproof. Liguori wants to stay in place. But she estimates the cost to elevate her home at $80,000 to $100,000.

In the end, Liguori, like many others, remains helplessly stuck in the morass. It’s been inconceivably difficult to extricate herself while living out of bags, working a fulltime job, caring for the grandchildren and elderly relatives who were also displaced, and, in a tragic turn of events, burying her father who passed away last week, after spending the last months of his life yearning to get back into the decimated Seaside Park home he shared with his wife and daughter.

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NJ Spotlight, an independent online news service on issues critical to New Jersey, makes its in-depth reporting available to NewsWorks.