BALDWIN, N.Y. — The recent letter from the Federal Emergency Management Agency about his flood insurance claim should have come as good news to William T. Lynch, who is now on his third apartment rental since his 1920s cottage here was gutted by Hurricane Sandy nearly three years ago.
“If you believe we underpaid your claim,” it read, “you may be eligible for an additional payment.”
To FEMA, the message amounted to a rare acknowledgment to some 142,000 homeowners who filed claims with the agency after the storm that its procedures, which have been plagued by allegations of improprieties relating to engineering reports insurance companies relied upon, may have been seriously flawed. But to Mr. Lynch, who has been driven to the point of desperation by his dealings with one government entity after another, the message seemed like another mirage in his so-far futile quest to rebuild his home in Nassau County.
“This is the most painful thing I’ve ever done in my life,” Mr. Lynch, a 52-year-old Iraq war veteran, said. “I’d rather go back to Falluja.”
Mr. Lynch remains uncertain about whether he should reopen his claim, and he is hardly alone. With a Sept. 15 deadline less than a month away, only about 11,000 eligible homeowners have asked FEMA to look again at their cases, a number that one advocate described as “scary low.”
The anemic numbers are the latest testament to the bureaucratic morass that has gripped so many of Hurricane Sandy’s victims. 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.
All over the region, homeowners, their advocates and elected officials have bitterly complained about the government programs meant to help people rebuild their homes and bolster them financially, declaring that the programs instead have been characterized by inexplicable delays and confusing directives. Even now, only a small fraction of homes destroyed by the 2012 hurricane have been rebuilt, and thousands of homeowners are occupying only partly rebuilt homes.
In New York City, the Build It Back initiative stumbled because of a cumbersome application process. In New Jersey, the Rehabilitation, Reconstruction, Elevation and Mitigation Program became bogged down when consultants lost months’ worth of documents and officials haggled over environmental and other reviews. And on Long Island, the New York Rising program alienated some storm victims who took out federal loans to rebuild before Congress had authorized relief funds, and later got smaller grants than their slower neighbors.
But the questions surrounding the flood insurance have been the most ominous because of the possibility of fraud.
The maximum coverage, as set by FEMA’s National Flood Insurance Program, is $250,000 in property damage and $100,000 for the contents of homes. But many homeowners affected by the hurricane received little of what they believed they were entitled to. Some appealed their decisions, usually to no avail. About 2,200 people went further and sued the agency; many have since settled those cases.
This year, revelations that engineers assessing flood damage for insurance companies altered some of their reports, leading to lower insurance payouts, were documented by The New York Times and “60 Minutes,” among other news organizations. At least one criminal investigation, started by Attorney General Eric T. Schneiderman of New York, a Democrat, is now underway.
“When it was confirmed that these practices were happening — to the extent of outright fraud — it really showed people that they were right, it wasn’t just them,” said Victor Tello, a staff lawyer at South Brooklyn Legal Services, who is coordinating his office’s response to legal issues related to Hurricane Sandy.
Insurance companies have argued that any cases of fraud on the part of engineers or adjusters were isolated, and that underpayments were an anomaly. A recent Senate report largely backed those assertions, but it has been criticized for relying on FEMA data and for not interviewing insurance industry critics.
Elected officials are now concerned that relatively few homeowners will take the agency up on its offer.
In a letter on Thursday from Senator Robert Menendez, Democrat of New Jersey, to FEMA’s administrator, W. Craig Fugate, the senator asked that the deadline be extended three months, to Dec. 15, saying that people were hesitating because of “confusion and the amorphous interpretation of rules.”
Mr. Menendez also criticized FEMA for what he described as its halfhearted outreach efforts, saying the agency was “still behind the curve due to a slow start in the initial days and weeks following the announcement.”
In New York, Gov. Andrew M. Cuomo, a Democrat, announced on Thursday that he had asked the federal Department of Housing and Urban Development to waive a regulation that would require New Yorkers who received additional FEMA money to pay back funds granted to them previously by the state.
In an interview, Roy E. Wright, FEMA’s deputy associate administrator for insurance and mitigation, was apologetic.
“I’m sorry we’re at a point at which folks have had to come back,” Mr. Wright said. “I absolutely empathize with the people on the ground who are trying to maneuver through a process like this. Perfection is not within my grasp, but I absolutely can and will change this customer experience.”
Mr. Wright did not sugarcoat the numbers, acknowledging that the applications had “hit a plateau” in recent weeks.
And while he did not rule out extending the deadline, he was optimistic that the final numbers would rise. He estimated that homeowners could get tens of thousands of dollars more.
He also used a baseball analogy to assure homeowners that FEMA would try to give them the benefit of the doubt. “My instruction is, the tie goes to the runner,” he said.
Nonprofit groups, like the Touro Law Center’s Disaster Relief Clinic in New York and the Ocean County Long Term Recovery Group in New Jersey, have been holding free clinics to help homeowners apply.
Lawyers with expertise in disasters have also been courting storm victims, promising to help them maximize their claims — in exchange for a contingency fee, typically 28 percent.
One firm from Washington, Weisbrod Matteis & Copley, which represented whistle-blowers who noticed fraudulent engineering reports after Hurricane Katrina, has been especially aggressive, so far signing up 800 clients and sponsoring frequent meetings.
At a recent meeting in a synagogue in Freeport, N.Y., about two dozen people listened as two lawyers from Weisbrod presented a video and answered questions.
“Either people don’t know, or they’re so damn tired of Hurricane Sandy, of insurance, of politicians, of all that crap, and I understand it,” one of the lawyers, James A. Fussell III, said. “But FEMA admitted, ‘Yes, we messed up, and you may have left some money on the table.’ So stick it out, and fight the fight.”
Joyce Andersen, 70, a retired data systems manager from Toms River, N.J., is one of the homeowners who decided to turn over her claim to the firm. Floodwaters soaked the insulation in her house, ruined the floors and weakened the foundation piers. She received only $23,000. But she cringed at the thought of once again hauling out a stack of papers that has expanded to fill a sturdy beach bag.
“I don’t want to do it anymore; I’m done,” Ms. Andersen said. “Whatever I get, they are entitled to a percentage because they would get more than if I did it on my own.”
But one person who listened to the lawyers’ presentation and remained undecided was Mr. Lynch, the Iraq war veteran.
On a tour of the skeletal remains of his house on Friday, Mr. Lynch said that FEMA offered him $77,000 based on damage assessments from his insurance company’s engineers. Various independent engineers he later hired estimated the damage at about $375,000.
Mr. Lynch, a former director at the Swiss bank UBS, said his experience with New York Rising and the Small Business Administration had been even more surreal. One case manager lost his application, delaying his case by several months. He says the state is willing to pay $122,000 to elevate his house, as mandated by FEMA rules, and another $63,000 in repairs. That means he is still well short of what he needs to complete basic structural repairs.
“You’re on this constantly moving ground with them where you never know,” he said of his dealings with government agencies.
By contrast, Mr. Lynch pointed to his neighbor across the street. That neighbor had a different engineer, and a different insurance company, and got the maximum $250,000 in flood coverage. He rebuilt his house and returned a year ago to a street that remains half empty.