Mortgage

They got their insurance money after Hurricane Ida. Now they’re wrestling their mortgage company. | Legislature

They got their insurance money after Hurricane Ida. Now they're wrestling their mortgage company. | Legislature
Written by Publishing Team

When Steve Kinney first received a check from his insurance company for Hurricane Ida damage, he finally thought he had the money to fix his home in St. Charles Parish.

But one step remained: His mortgage company needed to endorse the check.

So, he mails it to his lender, thinking they’ll sign it and mail it back, giving him the money he needs to hire a contractor.

Instead, Kenny learned that an unfamiliar website, InsuranceClaimCheck.com, would hold and manage the money. If he wanted to get to the money, he would have to jump through several more rings.

It took nearly a month for the lender, the loan shark, to send him a portion of his last insurance check. Meanwhile, the contractor who lined up to fix his house took on other jobs.

“They’re acting like this, it’s their money,” Kenny said earlier this month, standing on the concrete floors of his home in Destrehan, under the blue tarp roofs. “This is my insurance money and they’re holding it hostage.”

A Loan Depot spokesperson declined to comment.

Four months after Hurricane Ida swept southeast Louisiana, thousands of residents—already exhausted by the time-consuming insurance claims process—face a new set of bureaucratic hurdles with their mortgage companies.

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Lenders often monitor how insurance proceeds are spent to ensure that the property they financed is brought back to market value. But every company approaches the process differently, and there are few regulations governing how the money is distributed.

“There is no rhyme, reason, or continuity about how much they will keep and for how long,” said Douglas Quinn, president of the American Policyholder Association, a consumer advocacy group. “They often abuse this practice.”

The frustrations came as no surprise to residents of southwestern Louisiana, who spent sixteen months recovering from hurricanes Laura and Delta. Representative Philip Tarver, a Republican from Lake Charles, introduced a bill during the last legislative session that would give homeowners a lump sum from their insurance proceeds up front. The proposal did not even receive a committee hearing.

“I tried to get something done and couldn’t get any benefit or traction,” Tarver said.

That is likely to change. The second leader in the Louisiana House of Representatives, Tanner Magee, a Homa Republican, said he faced his own frustrations by persuading lenders to release his insurance money. He said lawmakers will reconsider how they place safety barriers on mortgage companies in the legislative session that begins in March.

“It’s like its own cottage industry: how much can we put you down?” Maggie said.

Part of the problem, Quinn said, is a lack of consistency among lenders on what it takes to access cash. Sometimes they work on a repayment plan, requiring homeowners to provide cash for repairs from their own savings before they release allotted insurance money.

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“You think you’re about to cross the finish line and then your lending institution is there to give you that last little kick in the pants,” Quinn said.

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In order for Kenny to have access to his insurance proceeds, he first had to order a check, to determine how much work had already been done. When his inspector finally showed up in early December, she initially said she couldn’t climb his front steps, and asked Kenny to take pictures instead. Once she filed her report, it took two weeks before the lender agreed to release the money. It took another week for the check to arrive in the mail.

“I feel like I’m just pooping in the toilet and it didn’t come out,” said 63-year-old Kenny. “I just roll around and around and around and around and around.”

Galen Hare, with Hare Shonara trial attorney in Metairie, said the process is very complex, as his firm has two full-time employees dedicated to bargaining with mortgage companies.

“There is no uniform set of rules that mortgage companies have to follow,” he said, adding that lenders often change their procedures halfway without notice.

For those who do not have a law firm backing them, the process can be infuriating. Kenny spends his Fridays from work calling InsuranceClaimCheck.com, trying to get them to release his money.

To make matters worse, the site doesn’t even tell him how much money he keeps. A request for comment via the site was not answered.

Chief Examiner Michelle Jenson said the state’s Office of Financial Institutions, which is charged with regulating lenders, could open an investigation if a consumer files a written complaint. In general, if insurance proceeds are less than $40,000 and the consumer is aware of their loan repayments, they shouldn’t have much trouble accessing their money, she said.

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Quinn said consumers should have a right to a clear and consistent policy regarding how claims funds are allocated and released for repair. He said lenders should also distribute the money up front, rather than through repayment.

Additionally, consumers must earn interest on money held by mortgage companies, Quinn added. For six years, he said, a bank held $244,000 in insurance proceeds for a Hurricane Sandy victim and didn’t pay her a penny of interest. “They act like it’s their money,” Quinn said. “It’s corporate arrogance.”

Kenny counts himself among the luckiest survivors of Hurricane Ida. A contractor agreed to fix his roof several weeks after the storm, even though his insurance company has yet to pay him. But his recovery has since stalled. The contractor he found to create new slabs and pavers is booked until March. If he had received his insurance proceeds when it was first distributed, he is convinced the business would have been finished by now.

“We’re on our way for four months now and I’m no closer to getting this done than I was three weeks into the storm,” Kenny said. “No one said this would be an operation. I’m at my wits’ end.”

Are you having problems with your insurance company or lender in the wake of Hurricane Ida or Laura? Submit your story to bpaterson@theadvocate.com and the reporter may contact you.

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