- Sept. 21, 2016
Changes on a State and Sub-Contractor level of the state that are needed to screen SBA data provided to the state. These are the main issues and the states that can be taking to correct what could be thousands of mistakes of classifying homeowners with what is known as the SBA Issue when it has actually nothing to do with taking the SBA assistance and everything about not taking the money. The State of Louisiana Office of Community Development - Disaster Recovery Unit (OCD-DRU) and it's main contractor IEM Inc. continue to ignore reports that hundreds of homeowners have be grouped into the "SBA Fix" category by mistake and could actually be costing Louisiana Homeowners nearly $55 million by being wrongfully labeled by IEM Inc, State OCD-DRU and the Quality Control group and it's contractors.
The State of Louisiana OCD-DRU needs to screen:
- SBA cancellation codes C10-C16 and identify via the SBA datafeed how many homeowners have been penalized the SBA DOB incorrectly using HUD Guidance 2013 and SBA Cancellation codes.
- Our research estimates over 700 homeowners were not correctly vetted of this issue and IEM Inc. management as well as senior management of the OCD-DRU refuse to research this issue.
- SBA did not update it's datafeed from "Approved" to "Declined" on many homeowners when the homeowners application information changed.
- Homeowners have had to research their SBA status as well as their codes to report to the state. The state's senior director would interogate the homeowner and ask personal and financial information to why the SBA changed from Approved to Declined. In most reported cases it was of no concern to why, the person was in prison, died, it didn't matter because the SBA clearly declined all SBA funds to the family which made them ineligible for the SBA loan.
- SBA did not confirm the homeowners ability to repay the loan even when the homeowner requested lower monthly payments due to the inability to repay what the SBA calculated to be their monthly payments.
- In some cases the SBA offered monthly payments more than double of what the household could afford in additional debt burden. The SBA did not change the monthly payment amount to fit the homeowners ability to repay the loan but still listed the federal assistance as available to the homeowner thus penalizing the homeowner with the SBA loan as a duplication of benefits even when not drawn.
- SBA approves 15 and 30 year payment terms to seniors over 80 years of age without concern of the ability to live to the term of the loan contract when homes are used as collateral.
- Many families are unaware of the financial responsibility they will have when living under the same roof as the retiree and senior family member with the SBA loan. The SBA seems to have offered loan terms longer than average living age.
- SBA has classified homeowners as incorrectly when questioned over the phone for reasons why the homeowner did not sign and return their SBA loan documents.
- Each case seems slightly different. A family that instructed the SBA to cancel the loan application may be classified as Canceled by Applicant while a family that simply ignored the SBA completely may be classified canceled by the SBA. The differences are one method still reports the loan as Approved while the other method would show the loan Declined.
- SBA does not provide in the Datafeed any cancel codes that may actually affect the status of the homeowner.
- A cancel code of C23 for a low to moderate income family still penalizes that family for the total SBA loan amount whereas a cancel code of C10 for a low to moderate income family allows a hardship to be declared and removes the SBA approved loan amount form the SBA Duplication of Benefits calculations. This could have been simply the difference between a homeowner answering the phone when the SBA call centered was calling for a follow up to why they didn't sign and return their loan application and the homeowner that blocked the incoming call. We have found homeowners classified incorrectly or penalized by the states auditors for not knowing the correct classification of their loan status and cancellation status.
- State Contractor you were not trained to identify issues with SBA classifications and codes. You followed the instructions from the State OCD-DRU.
- State of Louisiana Office of Community Development - Disaster Recovery Unit, you were trained most likely by CFI International and only know what the Grantee is responsible to know.
- CFI International you were only training Grantees within their scope of work as HUD CDBG-DR instructed you to do.
- HUD CDBG-DR you manage billions of dollars and expect other federal agencies in the sequence of disaster assistance to do their jobs as their Standard Operating Procedures state.
When One Government Agency stops following proper operating procedures for any reason that agency jeopardizes the whole delivery chain or in this case the sequence of disaster assistance.
- FEMA tells you that your household needs to apply for IA and IHP grants.
- FEMA sends damage determination letter called FEMA Verified Loss (FVL).
- FEMA tells you to to apply to the SBA Disaster Loan program if you would like to continue with your disaster recovery.
- FEMA may tell you that you must apply with the SBA and if declined by the SBA agency you will be referred back to FEMA for additional federal resources.
- It is very rare this will ever happen and if it does you can expect maybe $7,000 or less in ONA (Other Needs Assistance) grants.
- SBA will approve a loan for your household based on total income of $18,090 net per year.
- SBA will approve your household if you have a credit score of 350 or more.
- SBA will count all persons 15 years of age and older making a taxable income as part of the household income.
- SBA will approve your loan based on the amount of insurance you have related to the disaster. Example: $150,000 in Flood insurance the SBA will lend that homeowner regardless of income or credit scores up to the maximum payout of the insurance policy.
- SBA will approve your loan based on the collateral that was damaged and at pre-flood.
- You're not told about HUD CDGB-DR grants that you may have been qualified for if you didn't apply to the SBA disaster Loan Program.
- You're not told that Grants are awarded based on household income levels.
- You're not told that if your household income is less than 80% AMI you will receive HUD CDBG-DR grants when they become available in about 12 months from the disaster month.
- You're not told that if you take an SBA Disaster Loan that amount of the loan you are approved for will be counted as Duplication of Benefits against any future federal assistance even if you do not draw the full loan mount.
When FEMA directs you to apply for an SBA Disaster Loan and does not tell you that you are NOT required to apply for an SBA Disaster Loan that is mistake #1.
When the SBA Disaster Loan Program takes your credit and asset information for your application they will tell you when to expect your approval and your loan amount.
This is your Withdrawal period if you do not what to continue with the SBA Disaster Loan Program. You must ask them to withdraw you and to list your account status as "Withdrawn" or you my be classified as Approved which will be reported to your state Grantee handling your HUD CDBG-DR long term recovery.
If you signed your loan documents and mailed them the time in the mail is the only time you have to also withdraw from the program. The SBA calls this the time before they start processing the loan which is the minute your loan application arrives in their processing department.
Once your loan is in processing your loan status can never be "Withdrawn" or "Declined" or "Canceled" it will remain "Approved".
This is your introduction to the SBA Duplication of Benefits issue we are about to explode open for you right now.