Gov. Andrew M. Cuomo on Wednesday said several large mortgage lenders have agreed to speed the process of releasing insurance money to Sandy victims, but it could still be weeks before they receive their entire settlements.
Many storm-ravaged Long Islanders have been unable to cash settlement checks because they are made out to both homeowners and their mortgage lenders. But banks are refusing to endorse them, saying they want the property fixed first.
Without money, it's tough for homeowners to start repairs.
"Homeowners need help now," Cuomo said in a statement. "Any delay in making these types of critical home repairs can mean the difference between a family being able to live safely in their home or remaining needlessly displaced for weeks or even months."
As part of the governor's deal with lenders, Bank of America, Citi Mortgage, JPMorgan Chase, Wells Fargo and seven other financial institutions have agreed to expedite endorsements for initial settlement checks, typically less than $20,000.
Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project in Manhattan, called the agreement a "good step." But homeowners may still face delays, he said, in cashing subsequent checks, which are apt to be larger.
Since homes are the collateral backing mortgages written by banks, it's common for insurers to make out settlement checks to both homeowners and lenders. Banks often wait to sign off until the work is finished to make sure the property is repaired.
That delay, however, can be frustrating for homeowners trying to pay contractors.
"It is making my life a living hell," said Amy Kruysman, 39, whose South Wantagh home was gutted by Sandy.
It took weeks, she said, for Ocwen Loan Servicing of Atlanta to endorse her advance $50,000 settlement check. Finally, she called the State Department of Financial Services, and Ocwen released $16,000, she said. The company declined to discuss the matter.
Despite their agreement with the governor, the banks don't necessarily have authority to expedite check endorsements. In many cases, their loans have been bundled into securities by Fannie Mae, Freddie Mac or other institutions. Under those deals, the banks are obligated to follow procedures.
Before signing off, the banks may be required to approve contractors, review construction schedules, inspect the work and release the settlement in installments to ensure the house is rebuilt.
"The overarching rationale is to get money into hands of borrowers quickly," Freddie Mac spokesman Brad German said. "But there has to be a balance."