Lenders to Speed NY Insurance Claims
An agreement to be announced Wednesday will resolve an unexpected snag that has in some cases added weeks of delays in advance insurance payments to property owners hit by Superstorm Sandy, depressing recovery efforts in neighborhoods.
Eleven major lending companies have agreed with the state Department of Financial Services to speed up their endorsements of borrowers' initial insurance checks, typically worth $5,000 to $20,000. The lenders will also remove some new hurdles created for Sandy victims intended to protect the lenders' collateral in heavily damaged properties, said Benjamin Lawsky, the department's superintendent.
That should free up the critical first checks from a wait of two to three weeks and sometimes more, to a turnaround of just one or two days to policy holders, Lawsky told The Associated Press. Lawsky said the lenders will also immediately release insurance checks intended to make a home habitable and to pay expenses for living elsewhere.
Some banks had been requiring their customers to provide contractors' estimates and other receipts and records to show the advance insurance checks would go to repairing the assets covered by the mortgage, which are the borrowers' collateral for the mortgages, Lawsky said. Those requirements will end under the deal as part of Gov. Andrew Cuomo's effort to speed private and public sector recovery by cutting bureaucracy.
The problems were first discovered through the state's complaint line, reports made by victims at mobile service centers and through local officials. "When we found out that money was not moving as needed, we worked with the banks and mortgage servicers to solve the problem," Cuomo said. "The money will no longer be held up by red tape."
Cuomo has cut bureaucracy elsewhere in state agencies to speed answers and aid to Sandy victims. Lawsky said the state found after tropical storms Irene and Lee hit upstate a year ago that the first insurance checks to start repairs are critical to providing energy and hope in communities. Similarly, every day that first reconstruction is delayed depresses a community's spirit and the momentum to rebuild.
The lenders in the agreement cover most of the mortgages held by Sandy victims on Long Island, New York City and the lower Hudson Valley. They include Bank of America, Citi Mortgage, JPMorgan Chase, Wells Fargo Home Mortgage, M&T Bank, Apple Savings, Dime Savings Bank of Williambsurg, Emigrant Savings Bank, Homeward Residential, New York Community Bank and Ocwen Loan Servicing. The state will contact companies if necessary.