Pertinent Perils

FEMA and HUD promise housing assistance

The Department of Housing and Urban Development has joined with the Federal Emergency Management Agency to announce a housing assistance program for residents affected by Hurricanes Gustav and Ike. For more information about this program, click here to see the FEMA press release. The program appears to have much in common with FEMA’s Mortgage and Rental Assistance Program that was in effect during the 9/11 disaster, although it differs in some key respects to the assistance offered in the aftermath of Hurricane Katrina. Here are two tips from the experience of 9/11:

1. As I recommended in Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (Wiley, second edition, 2008), always use a Certificate of Mailing for any correspondence with your insurance company or any relief agency. This is different from sending a letter via registered or certified mail in which the recipient must sign to acknowledge receipt of the letter or package. With a Certificate of Mailing, the recipient’s signature is unnecessary; it is the post office that provides certification of the date and time of the mailing. Why is this distinction important? Consider what happened in the aftermath of 9/11 to Lower Manhattan residents who were directed to mail their applications for the FEMA Mortgage and Rental Assistance Program to a designated post office box address for processing. Applications were not accepted through other channels. Weeks and months passed and residents wondered what had happened with their applications. As it turns out, FEMA had not paid the rent on its post office box. If the post office would have returned the undeliverable applications to the senders, the problem could have been detected earlier. But one error compounded another and the post office staff simply piled up the undeliverable applications in a back room. The Certificate of Mailing would have proved that the applicants met their deadlines irrespective of the problems on the recipient’s end, that is one of the reasons that I recommend its use. By the way, the book incorrectly states that the cost of the Certificate of Mailing is $0.60. It was $0.60 at the time I submitted the manuscript for the book, but it has since risen to $1.10, which is still a good value.

2. The information that FEMA and HUD have released indicates that benefits will be paid three months at a time. If they will process the benefits for this program as they did for the Mortgage and Rental Assistance Program, they will electronically deposit the funds in the recipient’s bank account. Given the economic difficulties and credit pressure, it is very likely that there are applicants in the Gulf Coast who may have judgments against them. In such a case, it would be better to set up a separate account for receipt of the electronic funds from which the rent or mortgage expense could be paid. An attorney with the 9/11 Project of the New York Legal Aid Society had informed me of an instance in which one of her clients had commingled his FEMA housing assistance money with other funds in his account and the FEMA money was garnished by a creditor. If you may be facing this risk, it is better not to take a chance. Use a separate account.