Gov. Andrew Cuomo said his administration is working with banks to release nearly $208 million in insurance payments in 6,600 checks already approved and due to victims of Superstorm Sandy.
The insurance company payments must overcome several bureaucratic hurdles required under state and federal laws as safeguards against fraud when homeowners have mortgages on their properties. But the safeguards also snare people like Catherine Hall, who has waited for her check since November.
“Anyone in this situation will tell you the same thing: Every day you are fighting,” Hall said Tuesday, the 107th day she, her son and her husband have had to live in a hotel because their house is uninhabitable.
She said her insurance company told her in late November the five-figure check would pay for extensive repairs to the first floor of their Island Park home. What she’s faced since then is the need to complete written requests for inspectors, prior approvals and multi-copies of purchase orders. Meanwhile, she’s tapped out credit cards and bank loans to pay contractors.
Now she makes 40-mile round trips from a Garden City hotel to pick up her 4-year-old son from school every day. She said her friends, who are in the same position have been wrapping their damaged homes in red tape or hanging red tape as banners to protest the bureaucratic delays.
“It’s not like I’m going to take the money and run,” Hall said. “I’m just going to fix my house and go home.”
State Financial Services Superintendent Ben Lawsky said Monday the banks are cooperating in trying to get the funding to victims faster so they can pay for repairs. He said his office has received hundreds of complaints from victims of the late October storm, which was spawned when Hurricane Sandy merged with two other weather systems and killed people in 10 states but hit New York and New Jersey the hardest, flooding neighborhoods and destroying homes.
Much of the delay is because federal mortgage agencies require proof of repair work before paying insurance reimbursements.
Cuomo, a Democrat, said that after insurance companies have sent homeowners checks to pay for repairs, the money shouldn’t sit with banks and other lenders because of red tape.
“Servicers need to use maximum discretion to get money into homeowners’ hands as quickly as possible,” he said.
Lawsky said insurance companies and banks, regulated by his office, are working together to speed the process. Some of that is simply applying more workers to the task. Other steps include electronically transmitting payments rather than sending them through the mail.
Four banks alone — Wells Fargo, Bank of America, Citibank and JPMorgan Chase — have 4,000 checks worth $131 million that they and Lawsky are trying to free up faster.
“In December, we reached an agreement with the servicers that resulted in freeing up a portion of insurance funds,” Lawsky said. “But we are seeing now that the money is still not moving as quickly as homeowners need. While we understand there are some limits on how servicers release funds, we want to make sure that servicers are pushing those limits and getting insurance money out quickly.”
The December agreement speeded smaller, emergency repair checks to homeowners. But now larger checks are being issued and companies are being stricter about verifying the repairs. That verification is required by Fannie Mae and Freddie Mac, the government programs that help many middle-class homeowners secure mortgages.
Lawsky is contacting banks now. He said homeowners who are current on their mortgage payments and suffered only partial losses during Sandy should be subject to less restrictive and time-consuming reviews and approvals.