Play at your own risk
- Jul 9, 2001
- Reaction score
This is completely understandable and the article is another that's so short to fill a little on page spot on a web site and excite people that it doesn't explain it well at all. Of course, I'm not defending slow paying for due amounts or the inefficiency, but there are complications.
When insurance pays a claim that has a mortgage, it's the banks duty to make sure the repairs are done before the money is released. If a contractor is doing the work, it's the bank's duty to make sure the contractor is getting paid and his subs and material suppliers are, as well.
Were a bank that's guaranteed or insured by federal insurance to release money to a home owner who has not done repairs or paid his contractor, then we, the tax payer, could end up liable for an abandoned home in disrepair that the homeowner walks away from and leaves the bank stuck with a mortgage.
It's simply not prudent to release tens or hundreds of thousands of dollars to homeowners without verifying repairs are done and paid for. Look no further than to the millions and millions in road home grants that were disbursed to folks who never did the repairs on their houses. And, to make matters worse, there are people who are significantly behind on mortgages or even entering foreclosure/in foreclosure who cannot be given the proceeds of any insurance payments.
Then the banking industry can adopt procedures that will hold those funds for those mortgages that are in arrears/preforclosure etc. I would imagine that its relatively simple to do with all the data tech now available to mortgage companies. They were able to adopt the same algorithms during the housing boom for packaging sub-primes in relatively short order, i would imagine they can do the same for in-house data sorting.
And unlike the Road Home mess, the banks have legal avenues to pursue someone who doesnt make the necessary repairs.
I get the argument. I truly do. But when they send out a middle aged woman, who has ZERO construction related experience to inspect my on-going repairs, I have little faith in what their motives are. Meanwhile, they sit on my $80,000 that gets disbursed over a period of 4 months. Thats not acceptable and not the way things were done when I bought a home.
Furthermore, since CitiMortgage doesnt have "branches" locally, I had to overnite each check, at my cost, wait 3-5 days for it to clear, then another 2-3 days for them to process my builders invoice, and then another 2-3 days to receive ( business days, not week days )