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After allegations of widespread bad faith and fraud by forensic engineers and insurance firms handling National Flood Insurance Program (NFIP) claims in the aftermath of Hurricane Sandy, the Federal Emergency Management Agency (FEMA) has written letters to more than 140,000 homeowners offering to review already settled claims, and possibly to pay the policyholders more money for flood damage to their homes.

But at last count, barely 11,000 homeowners have taken FEMA up on the offer. The reason? Cynicism, suspicion, and fatigue — the harvest of a long, wearysome, and frustrating process that has left many homeowners still without the dwellings that were damaged or destroyed in the storm. The New York Times reported on the situation on August 18 (see: "Hurricane Sandy’s Red Tape Makes a Veteran Say, ‘I’d Rather Go Back to Falluja’,)" by David W. Chen.

"The anemic numbers are the latest testament to the bureaucratic morass that has gripped so many of Hurricane Sandy’s victims," reports the Times. "Some have been suspicious of FEMA’s letter, which seemed to suggest that a new review of their claims could function like an audit, and potentially force them to repay the government. But most say, with an air of resignation and frustration, that they no longer have the energy to fill out more papers and to deal with more layers of officialdom, even though they could be forsaking tens of thousands of dollars. They are simply spent."

The suspicion, it's fair to observe, is not at all far-fetched. That's because many of the people who may have been shorted by their insurance companies did receive other kinds of aid, such as payments from New Jersey's Rehabilitation, Reconstruction, Elevation and Mitigation (RREM) program or New York's Build it Back program. And under Federal rules, those grants may clawed back (or "recouped") if the homeowners receive an upward adjustment in their insurance awards — leaving the homeowners with nothing to show for their pains.

State and federal officials are sending mixed messages on the recouping issue. The Asbury Park Press has a report (see: "NJ won't take back Sandy victims' RREM money," by Russ Zimmer). "The Christie Administration believes that FEMA ... is responsible for addressing any duplications created by additional flood insurance payments received," Lisa Ryan, a spokeswoman for the New Jersey Department of Community Affairs, told the paper. "If a RREM homeowner receives additional flood insurance dollars as a result of FEMA's review of their claim, DCA will not independently pursue recapture of RREM grant funds in these instances."

But that's a reversal of New Jersey's position on the matter — and the US Department of Housing and Urban Development (HUD), the original source of the money, doesn't necessarily agree. "Brian Sullivan, public affairs supervisor for HUD, said it is unclear if ignoring the duplication of benefits clause in the federal Stafford Act is legally possible," reports the Independent (see: "Officials soften stance on Sandy insurance reviews," by Adam C. Uzialko. "They are asking us to waive the statutory requirement … which is technically illegal,” Sullivan told the paper. Further, the state grantees, in this case the DCA, have an obligation to abide by the Stafford Act from the moment the CDBG money is accepted, Sullivan added. 'I don’t know if they have the prerogative to decline a contractual obligation on their part, which is what they do when they sign the grant agreement,' he said."