TRENTON – Department of Banking and Insurance Commissioner Ken Kobylowski today commended the actions of New Jersey community banks, national banks and servicers, including Wells Fargo Bank, JPMorgan Chase, Bank of America, and CitiMortgage who continue to pursue ways to accelerate the release of insurance proceeds to New Jersey homeowners affected by Superstorm Sandy. Banks have processed in excess of $600 million in Sandy-related claims in New Jersey and have released approximately 80 percent of insurance proceeds to date.
“By continuing these actions, New Jersey banks are doing a great service to State consumers impacted by Superstorm Sandy,” Commissioner Kobylowski said. “One of the top issues we have heard from consumers has been that their mortgage company has been slow to provide them with the proceeds from insurance claims checks. In some cases, this has added to the difficulties consumers have faced following the storm.
“Our banks, state-chartered and national have stepped up to serve New Jersey consumers,” Kobylowski continued. “These positive actions by our banking community will get more insurance money into consumers’ hands to rebuild and repair damaged properties. This is another example of the Christie Administration and the private sector working together to cut red tape and get people back in their homes.”
As a standard requirement of mortgage notes and insurance contracts, insurance claims checks are issued jointly to the homeowner and the homeowner’s bank or servicer. In some cases, depending upon the size of the insurance claim check and other factors, the total amount of claim proceeds can be made available to the consumer immediately. But other funds are held and released in increments as repairs are completed. This process of monitoring a claim is to be certain the home is rebuilt to required standards and protect against possible contractor fraud in the repair.
Recently, the federal government issued guidelines that for borrowers who were current on their payments at the time of the storm and have less than 80 percent damage to their homes, banks and mortgage servicers have complete and unlimited discretion to disburse insurance proceeds and should apply the same practices to their Fannie- and Freddie-backed loans as they do to loans that such banks and servicers own themselves, subject only to quality assurance programs.
Wells Fargo and JPMorgan Chase will now advance 75 percent of the proceeds to current borrowers without requiring documentation or an inspection. The final 25 percent will be disbursed following a final inspection when the repairs are complete. Bank of America and CitiMortgage will now advance 50 percent of the total insurance proceeds directly to each such borrower without delay.