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Saturday, May 18, 2024

FEMA ‘can’t make you whole,’ and receiving federal recovery funding can mean going into debt

Navigating the post-disaster process can be tricky. With all the federal programs out there, there's still no guarantee homeowners will get back to their pre-storm conditions on grants alone.

Alan Hoyle, an independent volunteer, moves flood damaged household items to the front lawn of a home in Leland. (Port City Daily photo/Johanna Ferebee)
Alan Hoyle, an independent volunteer, moves flood-damaged household items to the front lawn of a home in Leland. (Port City Daily photo/Johanna Ferebee)

SOUTHEASTERN, N.C. — Federal disaster relief programs can’t completely undo the damage of Hurricane Florence; they just aren’t designed to bring homeowners back to their pre-disaster condition.

We can’t make you whole,” Darrell Habisch, Federal Emergency Management Agency (FEMA) spokesperson, said. “That’s not the function of FEMA.” 

RELATED: North Carolina floodplain maps are drawn ‘looking backward.’ These residents are paying the price

For some homeowners, returning to normalcy after flooding may mean taking on unanticipated debt.

Before the storm

Most flood insurance policies are offered through FEMA’s National Flood Insurance Policy (NFIP). NFIP rates are adjusted according to FEMA’s varied floodplain designations; the lower the flood risk category, the lower the monthly insurance cost.

Though being located outside FEMA’s floodplain may lead private insurers to dissuade homeowners from obtaining flood insurance, it’s still possible to own a policy.

In fact, FEMA recommends flood insurance to all homeowners who anticipate rain — so, everyone. “We recommend if you’re in any area where it rains, you should have flood insurance,” Habisch said.

Policyholders through the NFIP can be covered for up to $250,000 in building damage and up to $100,000 for personal property. NFIP will pay either the cost to replace a building or personal property or the actual estimated value of the property, up to its policy limits.

For those who lack flood insurance – even outside the floodplain – options are limited when flooding occurs.

Florence hits, now what?

Once building or property damage has occurred, FEMA steps in for temporary, limited assistance.

FEMA can assist NFIP policyholders and non-policy holders alike — as long as benefits aren’t duplicated. In accordance with the Stafford Act, FEMA can’t provide financial assistance to needs already covered by insurance companies. Once homeowners apply for individual assistance, FEMA will check with their respective insurers to see where it can fill in the gaps.

FEMA’s only objectives? To make sure people are safe, sanitary, and secure.

“We are not designed to be an insurance company,” Habisch said. “FEMA can strictly help you address your immediate needs.”

In Brunswick County alone, nearly 7,000 Individual Assistance claims have been recorded since Sept. 25. Across the state, FEMA has already allotted over $73.4 million to be spread between over 20,000 Individual Assistance claims. All of this funding is in the form of one-time grants, with no expectation of repayment.

On average, those approved for a FEMA individual assistance claim receive $3,611.03.

That’s on par with Habsich’s estimation of FEMA’s role after disaster touches down. Rather than bailing out entire homes or families, Habisch describes FEMA’s function as just one step toward full disaster recovery. Though he didn’t know exact maximum amounts available, he said individual assistance payments typically range from a few hundred dollars, to in more serious cases, anywhere from $3,000-$5,000.

When a few grand isn’t enough

So, what do you do when a few thousand dollars isn’t enough to rebuild your home, or your life?

Once FEMA grants its determined amount, or once an applicant is denied, individuals are then referred to the U.S. Small Business Administration (SBA). Though its name suggests otherwise, the SBA can offer loans to both individuals and businesses after a federal disaster is declared.

Unlike the United States Department of Housing and Urban Development’s (HUD) community development block grants, the SBA requires repayment.

SBA loans are just that — loans, capped at $200,000 to cover building damage and $40,000 for personal property damage. For low-to-moderate income homeowners who may be eligible for a HUD grant to rebuild or repair their home, with no requirement of repayment, the turnaround time may cast doubt on pursuing the process.

Since Hurricane Matthew hit the coast in Oct. 2016, the state has administered less than one percent of the $236 million it was granted in HUD funds to eligible applicants.

This means for potentially eligible homeowners, they may have to choose between taking on debt, or holding out for grant funds that may never be administered if they aren’t approved.

“We recommend that people contact other agencies and providers of disaster assistance for information on how an SBA loan would affect their eligibility for other programs,” Jack Camp, an SBA spokesperson, said.

Taking on debt

SBA applicants have received an average loan offer of approximately $40,000 in North Carolina since the storm. About 90 percent of SBA’s 1,100 approved applicants have been homeowners, Camp said.

Though SBA loans use slightly less restrictive parameters compared to commercial lenders, applicants must still show a “reasonable” credit history.

“If someone has a ding on their credit history, we can consider the circumstances, but, it’s on a case by case basis,” Camp said. 

Loans are available at either two- or four-percent fixed-interest rates with up to a 30-year term. If an applicant can show the ability to repay a loan, a reasonable credit history. and an eligible uninsured or uncompensated loss, SBA can step in.

“We are trying to make them whole,” Camp said. “We are doing what we can within our loan limits.”

Camp said federal SBA funds shouldn’t run out for eligible applicants; “The funds are going to be available for people regardless of how many homes we take.”

Homeowners aren’t judged based on whether flooding occurred in uninsured homes, in or out of the floodplain.

“It’s either an uninsured loss or it’s not an uninsured loss, that’s it,” Camp said. Still, according to Camp, the largest provider of rebuilding funds isn’t the federal government, it’s insurance companies.

After insurance and the four federal branches of disaster assistance — the NFIP, FEMA, SBA and HUD — have been exhausted, federal programs rely heavily on non-profit groups to cover the rest.

“Those very limited private funds can be allocated where there is the greatest need,” Camp said.

For those with questions about assistance programs, the New Hanover County Emergency Information website is a good place to start. Much of the information, especially concerning federal relief programs, is applicable to neighboring Brunswick and Pender counties.

Send tips and comments to Johanna Ferebee at

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