We came across this in The Record this morning…
March 13th, 2013 by admin
Sandy insurers step it up by Richard Newman
Mortgage lenders and servicers are getting more upfront insurance money into the hands of homeowners affected by superstorm Sandy, the state Department of Banking and Insurance said Monday.
Melissa Shuffield, a Chase spokeswoman, said the bank recently began advancing 75 percent of claims settlement checks in initial installments, up from 50 percent, and is guaranteeing property inspections within two days.
Wells Fargo’s loan-servicing division, which services loans for other lenders, began advancing 75 percent of the proceeds to borrowers this month without requiring documentation or inspections, said Marie Day Hayes, community outreach manager for Wells Fargo’s Northeast region. The bank had been advancing one-third of the proceeds.
Wells Fargo already had been advancing 75 percent to those whose loans are held on the bank’s own books, Day Hayes added.
Ken Kobylowski, the state’s top financial services regulator, issued a statement Monday praising these banks and others for “pursuing ways to accelerate the release of insurance proceeds” to homeowners. He singled out four of the biggest: Wells Fargo, Chase, Citigroup and Bank of America.
They have yet to sign off on a combined $102 million in insurance proceeds in New Jersey, Kobylowski noted. Other lenders have about $18 million to disburse.
The biggest financial companies amended their policies in recent weeks based on new guidelines by government-controlled mortgage giants Fannie Mae and Freddie Mac. The two corporations, which buy up a large majority of U.S. mortgage loans on the secondary market, issued guidelines that allow lenders and servicers to disburse more Sandy insurance proceeds upfront to borrowers who were current on their payments when the storm hit on Oct. 29.
“One of the top issues we have heard from consumers has been that their mortgage company has been slow to provide them with the proceeds from insurance claims checks,” Kobylowski said.
It is a standard requirement of mortgage notes and insurance contracts that insurance claim checks be issued jointly to the homeowner and the homeowner’s bank or servicer. The bank or servicer releases the funds in increments as repairs are completed and inspected. That way the lien holders can make sure money is spent as intended.
In New Jersey, banks have handled checks written on 30,000 claims worth about $600 million, with $120 million in payouts remaining to be made, the Department of Banking and Insurance said.
“By continuing these actions, New Jersey banks are doing a great service to state consumers impacted by superstorm Sandy,” Kobylowski said.