Property Damage For Delinquent Homeowners - Another Bureaucracy To Face

If you are a homeowner struggling to keep your home, and experiencing the frustrations of dealing with a giant bank or government bureaucracy, storm damage to your home can take things to a whole new level.

These days mortgage companies are guarding the insurance money carefully. When a borrower is delinquent on their mortgage, and then a tornado hits their house, the claim check for the damage will not be paid to the homeowner. The checks are arriving made payable to the the homeowner and their lender. That's right, if you are behind on your mortgage, and you get hit by a tornado, you may spend weeks trying to figure out where to send the insurance check so that the roofer can be paid.

Lenders facing huge numbers of borrowers abandoning their homes are especially worried about borrowers who are behind on the mortgage payments when a storm comes along and blows the roof off. Fearing that borrowers may be tempted to "take the insurance money and run" the lenders are requiring insurance companies to make the checks payable to both the home owner and the mortgage company.

That would be fine except for one thing. The mortgage company does not automatically provide any information to a borrower on how to go about cashing those checks. You do receive a nice letter from the insurer, explaining why the check is made out to you and your lender, but the home owner is left to run-the-gauntlet to try and figure out just what has to be done to get these checks processed.

In a continuation of the saga I detailed in a previous article, the delinquent borrower was also hit with a tornado, just as he was in the midst of a fight to keep his home. Thus began another fight to determine where the heck to send these insurance checks to, and what documents would be required in order to accomplish this task.

Turns out this was about as bad as fighting the foreclosure. We dialed a phone number given for what was supposed to be the "Disaster Assistance Team". The first phone number, on the bank website, was another customer service number, where the job is to make sure you don't get to anyone who can actually help you, without spending 15 minutes verifying all of your personal information and being asked if you'd like to make a payment on the mortgage. Only then did someone tell me that this was not the Disaster Assistance Team, but I needed to call another number. So I did.

This number appeared to be the correct one. We were advised that we had to complete a package of forms, and that we needed to request the package be sent to us. We were instructed to allow 10 days for delivery of the forms package. 10 days later, nothing. We called on the 10th day to ask for another package. Our second call to the second number. We were advised that we had not waited the full 1o days, and that nothing would be done until 10 days had passed.

On day 14, we called again, and this time the agent tried to email a package of forms. No email. Nothing. So, she requested that another package be sent out in the mail. Another week goes by, no package. Nothing ever arrived. Finally, I call them back. I get someone who says I can fax in the insurance adjuster's docs, the roofing company estimate and check copies to the Property Loss Division. She says "wait 3 days and call this number - she gave me a third number. She seemed really knowledgable, and at least we were getting somewhere.

I faxed the documents to the number she gave me, and called the Property Loss Division three days later. I get a voice message that says "Please enter your loan number". So I entered the loan number. The voice comes back on and says "I'm sorry, you've entered incorrectly, please enter your loan number". So I entered it again. Still the same message telling me that I was entering incorrect information, when I knew this was the correct loan number. I went through this circle 5 times before giving up. Very frustrating. So I figured maybe they did not have those docs in the system yet, and waited another day. It was April 19th, and we'd had those insurance checks in hand for 4 weeks.

The next day, April 20th, I called the property loss division again, and got the same message about "entering the wrong information". Finally, after about 5 times, it gave me an option to refer to an operator. I got Jessica on the phone. Fortunately for my sanity, Jessica knew what to do. In less than 5 minutes Jessica had directed me to a secret website where all of the forms and instructions were located for processing property loss claims. But clearly this website is a secret, because no one had any idea it existed but Jessica. Within minutes I had downloaded the entire forms package I needed to get those insurance checks processed so that the roofing company could be paid.

But not before we had to track down the roofing company, out in the field, to have them provide all of the documents required of them. There was a final estimate with the work to be done,  a certificate of completion, and Certification of Lien Waver and a W-9 tax ID form, needed from the roofers.

The borrower had to provide several forms as well. But at least we finally found someone who actually knew what forms were needed, and where they could be found.

By the time we got the forms, 7 weeks had passed since the storm. We had spoken with people in 3 different states, at 3 different phone numbers, and had been given two different mailing addresses in two different states, just trying to find out how to deposit insurance checks. For some, strategic default probably seems like a decision made to save your sanity.
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Donna S. Robinson is a 16 year veteran of the real estate industry, and a staff writer for Realty Biz News. Her website is www.RealtyBizConsulting.com   She provides coaching and consulting services to real estate investors as well as residential market analysis. She may be contacted at 888-915-9968