Banks Expediting Insurance Claim Checks

Normally, insurance claim checks must be endorsed by the mortgage bank or servicer for the property before the homeowner can cash them.

The Department of Financial Services (DFS) has received numerous complaints from homeowners that mortgage servicers and banks have been imposing unusually stringent requirements before they will sign insurance claim checks. This has resulted in unacceptable delays in releasing money to New Yorkers in need.

The following major banks and mortgage servicers have agreed to take action to expedite insurance payments to New York homeowners:

Banks and servicers are required to follow different rules imposed by Fannie Mae, Freddie Mac and investors who own mortgage backed securities. In general, as a result of discussions with the Cuomo administration, institutions are offering the following types of relief:

• Banks and servicers will now use as much discretion as they have under the rules to immediately move home repair funds to homeowners and their contractors.
• Banks and servicers will immediately release any portion of insurance or relief funds designated for living expenses or the replacement of personal property and will immediately release any funds in excess of the unpaid loan balance.
• If living expenses and personal property amounts are not itemized in the insurance or relief payment, banks and servicers will request that the insurer provide an itemization and will promptly release applicable funds.
• Banks and servicers will not apply any portion of an insurance or relief check to mortgage payment arrears without the consent of either the homeowner or a federal government-sponsored enterprise such as Fannie Mae or Freddie Mac.

Details may vary from institution to institution and are subject to investor and regulatory requirements. Borrowers should contact their individual banks or mortgage servicers for specifics.

Updated 12/12/2012