HUD, NJ Wrestle Over $1M In Sandy Recovery Loans

TRENTON, N.J. (CBS) -- The feds want about a million dollars from the state of New Jersey.

At issue, loans given to some victims of Hurricane Sandy that auditors suggest were not eligible. New Jersey would beg to differ.

It comes down to money, with the HUD Inspector General's office saying as many as 39 applicants exceeded income guidelines. Lisa Ryan with New Jersey's Department of Community Affairs responds by saying the auditors are in error. With one exception.

"We do admit that there were applicant income exceedances in Atlantic County due to a clerical error," Ryan told KYW Newsradio, "but we also believe that most of those exceedances were extremely small. For example, one applicant exceeded the income limit by only 91 dollars."

Those loans amounted to over $400,000.

"We believe that a lot of these income exceedances, they don't detract from the program's overall purpose which was to provide home buyer assistance to people who were affected by Sandy who otherwise would have been not able to purchase a home," she added.

The state has filed a formal response with HUD, which makes the final call. Ryan says the state hopes to work out the issue in a way that "advances Sandy recovery in New Jersey in a positive fashion."