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Sandy Victims Facing Hurdles Claiming Insurance Funds

Residents with mortgages complain of delays in distribution of funds.

Michael and Devorah Merwitz lost their entire first floor to flooding due to Superstorm Sandy, but still, they say, they are fortunate.

The Cedarhurst residents said they’re fortunate because, unlike many Long Islanders dealing with the issue of rebuilding their homes, the Merwitzes had the funds saved up to immediately start doing repairs. They have flood insurance and received a check, but have not been able to receive the funds — almost two months later — due to the back and forth with their mortgage company, Bank of America.

“It’s a rude surprise if you haven’t had the resources, and now they’re going to have to wait weeks until Bank of America pulls their finger up,” Michael Merwitz said. “I’ve heard other banks that have endorsed checks right away.”

Many Long Island residents are struggling to rebuild their homes after the devastating storm, but those with mortgages have an extra hurdle to clear before being compensated by their insurance companies because the mortgage company must sign off on the check. Some mortgage companies have even asked for repairs to be done before the funds are released, which clashes with the fact that many contractors ask for payments in advance of doing work.

“...the bank must be listed on the check,” Christina Shaw of the The Christina Shaw Agency wrote on Bellmore Patch’s Facebook page. “If the check is above a certain amount some mortgage companies will require their own property inspection to insure the work was completed.”

Assemblyman Harvey Weisenberg (D-Long Beach) said practices such as this have “resulted in a hardship for many families who lack the resources to pay for repairs pending reimbursement. It has also slowed the overall recovery process in my assembly district,” he wrote in a December letter. Weisenberg recently told Patch that banks and insurance companies “acknowledge the problem, but that doesn’t solve my problem.”

The Merwitzes’ loan is held by Fannie Mae, and is a larger amount than Bank of America can endorse at one of its locations, according to Bank of America Spokesperson Laura Hunter. Their check had to be sent to California to be processed, but was again delayed because it lacked the endorsement of the “second lien servicer.”

Michael Merwitz said he met with a Bank of America representative that was sent to New York to deal with Sandy issues, who then handled the paperwork. He said any delay caused by the paperwork is an error on the bank’s part.

Joanna Bernardini's says her experience has been easier than the
Merwitzes’.

"I have JP Morgan Chase as my mortgage holder," she wrote on the Bellmore Patch Facebook page. "It has been easy because I just go to a Chase Bank. Some mortgage companies do not have a local bank and that would be more difficult to get the check cashed."

Still, Merwitz was reassured to at least get a response from Bank of America after weeks of silence.

“It looks like b****ing and moaning makes a difference,” he said.

Story by Stephen Bronner.

Patricia Vacchio January 08, 2013 at 01:57 PM
Outrageous! I too have been held up on repairs due to the mortgage company releasing my funds as they "see fit". In my opinion this is a private contract between me and my insurance company in which I have paid the premiums for 30 years never filing a claim. Now that I need to collect, I do not see where the bank belongs in this transaction!. In some way I consider this illegal.The bank has also advised me that they will be "setting up" an escrow account in which they will hold MY funds until they are ready to distribute. Imagine the interest the banks will be making on all the funds they will be holding in the escrow account that they are "setting up" with everyone else's money. I am pretty sure we ALL have escrow account already set up where our taxes and insurance monies are held. Shouldn't OUR money be held in our account. I don't care if we make $3 interest - this is our money. Again, in some way this seems illegal that the bank would be making money on money that is not theirs. The ONLY valid point they have is that they have a "vested interest" in the property. Fine - send your own adjustor at your cost, just as the insurance company did. Insure that you are protected for the amount of the mortgage and release our funds!! One final note - my mortgage is with Citimortgage, I find it interesting that they are telling me how to spend my money; years ago I should have told them how to spend theirs & maybe my tax dollars wouldn't have had to bail them out.
Harlan Morgan January 08, 2013 at 03:21 PM
Bank of America should be ashamed of themselves. I will never open an mortgage through them.
Robin O January 08, 2013 at 06:08 PM
I think I'll tell my bank that if they give me a hard time releasing the funds, I will refinance my mortgage to another bank.
Sharon January 08, 2013 at 09:20 PM
We too have been suffering with our mortgage company, Capital One,with this very same issue. Every time I call I get a different answer. They will not endorse the check because we were late in payment (we are in forbearance) and then said they have to do an inspection (which I am supposed to pay for!), etc., The other mortgagor, Chase, endorsed the check at a local branch after a ten minute phone call. We cannot move forward with repairs until these funds are released. I will remember how badly we are being treated by Capital One.
Gail January 09, 2013 at 03:50 PM
Please forgive me if I'm not getting this right but....those of us who followed the rules and have flood insurance are being put through hoops by mortgage companies & banks. If we chose to disregard the rules and not carry flood insurance FEMA will help us out with no hoops?
michael merwitz January 09, 2013 at 04:02 PM
exactly!

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