New Jersey’s top insurance regulator this week commended the actions of New Jersey community banks, national banks and servicers — including Wells Fargo Bank, JPMorgan Chase, Bank of America, and CitiMortgage. The regulator said these financial institutions continue to pursue ways to accelerate the release of insurance proceeds to New Jersey homeowners affected by Superstorm Sandy.
The regulator said 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,” New Jersey Banking and Insurance Commissioner Ken Kobylowski said in a statement Monday.
“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 said. “These positive actions by our banking community will get more insurance money into consumers’ hands to rebuild and repair damaged properties.”
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 designed to ensure that the home is rebuilt to required standards and protect against possible contractor fraud in the repair, according to New Jersey’s Department of Banking and Insurance.
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.
The New Jersey Department of Banking and Insurance said 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.
Officials in Sandy-impacted regions have been scrutinizing banks’ handling of homeowners’ insurance payments. In New York, regulators are also working with major banks and mortgage servicers to help homeowners cash insurance settlement checks following Sandy. New York officials said earlier last month there were still more than $200 million in insurance payments that were’t released from banks to Sandy victims in New York.