Cuomo Sets Expedited Insurance Payments
Governor Andrew M. Cuomo has announced that major banks and mortgage servicers will take action to expedite insurance payments to New York homeowners. Currently, insurance claim checks must be endorsed by the banks or mortgage servicers before homeowners can cash them, causing frustrating delays at a time when the money is needed for home repairs or for living expenses. These new actions will enable the insurance companies to get the money to homeowners faster.
The Department of Financial Services (DFS) has received numerous complaints from homeowners that servicers and banks have been imposing unusually stringent requirements before they will sign the checks. This has resulted in unacceptable delays in releasing the money to New Yorkers in need. However, the new measures will allow homeowners to receive their money expeditiously.
“Homeowners need help now and that’s why insurers are sending advance checks to meet their immediate needs,” said Governor Cuomo. “Any delay in making these types of critical home repairs can mean the difference between a family being able to live safely in their home or remaining needlessly displaced for weeks or even months. I want to thank these banks and mortgage servicers’ for partnering with us and I call on all other banks and servicers to meet the standard set by their competitors.”
Benjamin M. Lawsky, Superintendent of Financial Services, said, “Insurance payments are an essential part of people rebuilding their lives. We will continue to do everything we can to see that claims are processed promptly and homeowners and businesses receive all funds due to them so they can recover. It is good to see these banks and servicers stepping up to the plate to try and speed our State's recovery.”
The Governor today also announced that the grace period on mortgage payments has been expanded for another three months. This additional time will allow New Yorkers affected by Hurricane Sandy to catch up on their payments without having to face collection agencies or a lowered credit score.
The Department of Financial Services has received numerous complaints from homeowners that servicers and banks have been imposing unusually stringent requirements before they will sign the advance checks, with the result that they have been unduly slow in releasing the money. This is causing serious problems for many families who desperately need their insurance money both to live and to start making repairs. The measures announced today will allow more homeowners to receive their advance money promptly.
Banks and servicers are required to follow different rules imposed by Fannie Mae, Freddie Mac and investors who own mortgage backed securities. In general, as a result of discussions with the Cuomo administration, institutions are offering the following types of relief: The banks and servicers will now use as much discretion as they have under the rules to immediately move home repair funds to homeowners and their contractors;
Banks and servicers will immediately release any portion of insurance or relief funds designated for living expenses or the replacement of personal property and will immediately release any funds in excess of the unpaid loan balance; If living expenses and personal property amounts are not itemized in the insurance or relief payment, banks and servicers will request that the insurer provide an itemization and will promptly release applicable funds; Banks and servicers will not apply any portion of an insurance or relief check to mortgage payment arrears without the consent of either the homeowner or a federal governmentsponsored enterprise such as Fannie
Mae or Freddie Mac.
Details may vary from institution to institution and are subject to investor and regulatory requirements. Borrowers should contact their individual banks or mortgage servicers for specifics.
In addition, some New Yorkers are finding that the three-month grace period on mortgage payments previously offered by banks and mortgage servicers is not long enough for them to get back on their feet. At the urging of the Cuomo administration, banks and servicers will extend this period for up to another three months, for a total of six months post-storm for the following types of relief: Postponement of foreclosures and evictions. Waiver of late fees on mortgage payments. In some cases, based on a borrower's specific facts and circumstances, forbearance on mortgage payments where the borrower has been affected by the storm and is seeking relief.
Details may vary at different institutions and are subject to investor guidelines, so homeowners should check with the holder of their mortgage. At the end of the grace period, banks and servicers will institute a payment plan to permit homeowners to repay their missed payments over an extended period of time.
"We applaud Governor Cuomo and Superintendent Lawsky for taking the lead in working with the banking industry on this important issue and we are pleased to work with Governor in continuing to help homeowners during this difficult time," said Sanjiv Das, President and CEO of CitiMortgage.
Josh Zinner, Co-Director of NEDAP, an economic justice organization based in New York City, said, “NEDAP commends the Cuomo Administration for working to ensure that mortgage servicers do not interfere with the full and expeditious payout of insurance proceeds to homeowners affected by the storm. We hope that every mortgage servicer doing business in the state will take all measures possible to avoid foreclosures, and to help communities hard hit by the storm to rebuild.”
Margaret Becker, Co-director, Homeowner Defense Project, Staten Island Legal Services, “The grit and stamina of homeowners along Staten Island’s storm-ripped shoreline is astonishing, but they are weary. The hard physical work takes a toll, but so does red tape. The Department’s advocacy and the banks’ commitment to get insurance funds released quickly and give homeowners flexibility on their mortgage payments will help remove some of the burden for these people as they slowly put their lives back together.”