19 April 2006

Hurricane Countrywide

One would think that insurance companies and mortgage companies would be among the hardest hit industries from a disaster such as Hurricane Katrina. Well, I have quickly learned another lesson about how big corporations get bigger by screwing over individuals. As impossible as it has been dealing with insurance providers following Katrina, my mortgage company, Countrywide, has made repairing the damage to my home nearly impossible.

I needed a new roof; my slate roof was damaged beyond repair due to Katrina. I narrowly missed being flooded and I can't imagine how those who were flooded and lost everything (instead of just a roof) are able to sanely deal with their mortgage company if they are being treated similar to the way I am. I have fought with my insurance for 7 months and still have not come to a resolution, however at least the insurance company has issued a check to me (which was approximately half of the replacement value of my roof according to contractor estimates) and fully admits that they are just overwhelmed. They sent out a second adjustor 7 weeks ago to update the claim estimate so they should get around to making me whole by about mid-summer. What a joke. But at least they pretend to care.

However, Countrywide Mortgage is involved in unfair and unusual business practices associated with processing insurance claim checks. When you have a lien on your home, the insurance company writes the check payable to the homeowner and the mortgage company and both must endorse the check. In my opinion, this is a good practice if your lender is reputable. It allows your lender to have some say in the process of making repairs and insures that their investment in the property is protected. If your lender is Countrywide it is a nightmare.

I finally received a substantial check from my insurance company on March 10th. I went to a local Countrywide service center as soon as I could after receiving my check, which happened to be March 14. The staff at the service center had me endorse the check, they took it and said they were overnighting the check to their offices in California for endorsement and the money would then be sent back to me. Sounded good, so I hired a contractor to replace my roof. It had to happen and I could not wait any longer. Well, little did I know that Countrywide lies every time you talk to them. They actually take the money, deposit it in a 'special' account and then refuse to give the money to you. Each time you call them they give you another story, a new requirement to meet, or more paperwork to complete.

The contractor completed the work on my roof in about 10 days after he was hired and did an excellent job. I felt obligated to pay him (Countrywide's unfair business practices are not his fault) and paid him out of my savings. Countrywide actually sent out an inspector 12 days ago and filed the inspector's report stating that the work on my house is 95% complete (basically agreeing that I paid for the repairs to my house from Katrina out of my own pocket). Countrywide has admitted to me that they have this report but then sent me more paperwork to complete such as a certification of completion that requires notarization and a waiver of lien to be signed by the contractors that worked on my house and also notarized! Everytime you get past a hurdle in this process with Countrywide they make up another one! I sent this to them and now they are still working on processing the paperwork.

The truth is this : Countrywide has had my insurance check (sent to me and Countrywide to complete the repairs on my home) since March 15. They have found numerous ways to keep that money in their 'special' account. I have been forced to pay for the repairs out of my own pocket, negating the reason I had insurance coverage in the first place. In the interim Countrywide has sent out their own inspector and confirmed the repairs are complete. So why does Countrywide behave in this way? Because they are making a tremendous amount of money on interest by holding individual's claim money for as long as possible. If the average Katrina claim check is $30,000 and Countrwide can keep 1000 of their mortgagor's checks in their 'special' account by slowly rotating money in and out of that account, they would have $30 million to invest and collect interest on. I fully believe that this is the explanation for their behavior and they are not able to demonstrate that they act in any other manner.

It is time for Charles Foti, our Attorney General, to file a lawsuit against Countrywide. No more threats, half-hearted investigations, or sucking up to big businesses. These business practices are unfair, individuals in Louisiana are being taken advantage of, and a California corporation is getting richer from our hardships.


At April 19, 2006 10:25 AM, Blogger Lady Morwen said...

Oh my yes!

Countrywide is a screw-job from Hell.

They told us we needed vacancy insurance a few months after the Flood, and we were staying in California. (I know where their headquarters are.)

My partner Betts deals with them like a Samurai... they don't win.

Our plan is to get our SBA first, start repairing the house, and when our Block Grant is issued, we are going to eliminate Countrywide from our lives. (SBA is going to take our mortgage at 5% less interest than Countrywide. *big grin*)

The way to deal with companies is to get out of business with them, period. It's the only way to deal with these kinds of rapacious bastards.

At April 19, 2006 11:02 AM, Anonymous Editor B said...

That sucks. By contrast, our mortgage company (US Bank) has told us that our insurance money will be placed in an interest-bearing escrow -- and we get the interest. The veracity of this assertion remains to be seen.

At April 19, 2006 1:31 PM, Blogger Roux said...

It sounds good to "just not do business with them" but many times as soon as you close the loan at your bank they sell the paper to someone like Countrywide. That's who my mortgage is with now and when they screwed up my escrow account it was a nightmare.

At April 19, 2006 4:43 PM, Anonymous Anonymous said...

I don't know how much you got from the insurance, by my understanding of the law is that they were supposed to send you 1/3 or all of it if it was less than $12-15,000 immediately.

IANAL so call one.

At April 21, 2006 11:07 PM, Blogger john finnegan said...

Countrywide is in trouble. Yes they keep the insurance money for investment. But, this insurance money is but a very small portion of their business portfolio. Bottom line.

If you want them to pay you the money, act aggressively, not through them, the bureacracy, though others. Write a letter to the COO or better yet the CEO who is semi-retired and living large. He doesn't want the headache, by the way, in addition, could care less about the homeowners who have suffered at the hands of the storm. Countrywide has not foreclosed on any properties in the area. Why? Because they don't want to. Why? because they would rather the mortgage payment than the future "blighted" properties.
They are banking on this.
Hense the delay is a financial "hedge", a smart one at that. So again, If you want your insurance payments in a timely manner, remember, the squeaky wheel gets the oil. And if that doesn't work CC: California senators Boxer and Feinstein. Another political nightmare. Also don't forget about sending a copy to that bulldog Nancy Pelosi, and I promise you will get some action quickly.

At May 03, 2006 4:07 PM, Anonymous Anonymous said...

Deceptive practices by Countrywide when I was shopping for a lender to refi my home. Countrywide told me the loan was approved the rate locked and the fees for the loan were about 4000 less than with two other lenders - no loan origination fee! The shock came later after the appraisal was complete, Countrywide tells me I was approved electronically but the underwriter denied my application and I could still get a loan at a higher rate with a prepayment penalty and "get this" a loan origination fee. Luckily, I was able to contact two other lenders and I'm only out the cost of the appraisal which I still have not received and it is not transferable to another lender.

At September 03, 2007 7:02 PM, Anonymous Anonymous said...

I went to get a loan from them after Katrina, I owned my home free & clear but needed alot of repairs. I was told by the Loan Officer that they would use market value prior to Katrina to base the value. I passed....did not sound logical. I received 15 calls from the CW Loan Officer after I declined the loan officer, bordering on harassment. Glad I passed.

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