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| Hurricane-affected borrowers are upset about the way mortgage companies have been treating them, and Louisiana is doing something about it.
State Attorney General Charles C. Foti Jr. has launched an investigation into why Countrywide Mortgage is allegedly delaying its endorsement on checks for insurance repair proceeds, according to an announcement Thursday. Other lenders may join the list of companies being investigated. The attorney general said borrowers typically receive insurance claim checks made out to both the mortgage lender and the borrower. But consumers are reportedly complaining that Countrywide is either withholding endorsed checks, slow in forwarding endorsements or forcing borrowers to pay for repairs with out-of-pocket cash before it will release the funds. He noted one case where Countrywide held up a $100,000 check for over a month — forcing the borrower to come up with $50,000 of his own money to pay for repair work. “If the mortgage company refuses to release the funds or refuses to release funds in excess of the mortgage amount, this is not business as usual,” Foti said in the statement. “I intend to investigate all of these allegations and see what I can do to help our citizens get fair treatment as they try to rebuild.” In a statement, Countrywide acknowledged the delays and noted it has been overwhelmed by the high volume of insurance claim checks from the Gulf Coast region. But the Calabasas, Calif.-based behemoth said it immediately added staff, streamlined procedures and increased customer service representative training in response to the delays. “The magnitude of the tragedy in the Gulf Coast region warrants unprecedented efforts to help residents rebuild their communities, and we are committed to doing all we can to help our customers in this time of need,” Countrywide said in the statement — adding that “Claim checks are now being processed in a timely manner.” Foti also said borrowers are complaining about prepayment penalties charged when the insurance company pays off the mortgage of hurricane-damaged properties. “Consumers allege that some companies are charging exorbitant fees for paying off home mortgage loans early.” |
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Sam Garcia has been in mortgage lending since 1980, and is publisher of MortgageDaily.com, MortgageChronicle.com, FraudBlogger.com and CloserBlog.com. email:Â SamGarcia@MortgageDaily.com |
