(The following is a reformatted version of a press release
issued by New York Governor Andrew M. Cuomo and received via e-mail. The release was confirmed by the sender.) 
February 12, 2013 
Calls on Banks, Fannie Mae, and Freddie Mac to speed process to
allow needed repairs 
Nation’s Four largest banks, Wells Fargo, Bank of America,
Citibank and JP Morgan Chase, found holding more than 4,000
relief checks worth more than $130 million 
Governor Andrew M. Cuomo today announced that a Department of
Financial Services investigation uncovered $200 million in
insurance funds from Superstorm Sandy that are being held by
banks and have not yet been sent to homeowners who need the
money to pay for necessary repairs. 
The Cuomo Administration has sent letters to banks and mortgage
servicers asking that they use maximum discretion and effort to
speed the release of funds. The Department has also sent letters
to Fannie Mae and Freddie Mac seeking emergency reforms of their
rules and policies relating to the release of insurance funds by
banks and servicers. 
“Families need to be able to return to their homes and the State
economy, which took a hit from Superstorm Sandy, needs the boost
from spending on repairs. After insurance companies have sent
homeowners checks to pay for repairs, the money should not be
sitting with the bank because of red tape,” Governor Cuomo said.
“Banks need to use maximum discretion to get money into
homeowners’ hands as quickly as possible.” 
DFS Superintendent Benjamin M. Lawsky said, “In December, we
reached an agreement with the banks that resulted in freeing up
a portion of insurance funds. But we are seeing now that the
money is still not moving as quickly as homeowners need. While
we understand there are some limits on how banks release funds,
we want to make sure that they are pushing those limits and
getting insurance money out quickly. We will work with Fannie
Mae and Freddie Mac to reduce barriers to the flow of insurance
Many Storm Sandy victims receiving insurance claim checks are
facing a hurdle that they often hadn’t anticipated: the check is
issued jointly to the homeowner and that homeowner’s bank or
mortgage servicer, thus requiring the bank’s endorsement of the
check before the homeowner may access the funds. This dual
endorsement is a standard requirement of mortgage notes and
insurance contracts. 
Before the banks will release the money, they may require proof
of repair work, according to rules of the federal mortgage
agencies, Fannie Mae and Freddie Mac. This has caused delays in
homeowners receiving money they need to make repairs, in many
cases so they can return to their homes. 
DFS has received hundreds of complaints from New Yorkers
frustrated by their bank or mortgage servicers’ failure to
disburse these insurance proceeds. Homeowners say banks have
either been too slow in processing paperwork or have placed too
many conditions on homeowners before disbursing funds, thus
resulting in delays to home repairs. 
The Department of Financial Services has surveyed mortgage
servicers about how much in insurance claims they are holding.
As of late January, 27 servicers representing 95% of the New
York market were holding proceeds for 6,611 borrowers for a
total of about $208 million. The four largest banks, Wells
Fargo, Bank of America, Citibank and JP Morgan Chase, are
holding 4,159 checks worth $131 million. 
These numbers are rising as more insurance checks are issued and
as banks determine that more homeowners’ repairs need to be
monitored since more money is now at stake for these homeowners. 
In December, the Department and major banks reached an agreement
that improved the situation by speeding advance checks to
homeowners, but as larger insurance checks are issued, banks and
servicers are still holding onto a significant amount of money
and are reluctant to release this money without verification
that the repairs are being made. The banks most frequently cite
Fannie Mae and Freddie Mac guidelines as the reasons that they
are not able to disburse more funds. 
The Department believes that for homeowners who are current on
their mortgages and did not suffer total or near total loss,
banks should have substantial discretion to release funds. The
Cuomo Administration is discussing with the federal mortgage
agencies clarifying their rules. 
In a letter to banks and mortgage servicers, the Department
proposed the following best practices to speed the release of
funds. Banks and servicers should: 
1. Publish clear, easily accessible information on their
websites describing the procedures required to release funds,
providing copies of required forms, and listing direct contact
information for consumer representatives.
2. Designate a single point of contact for homeowners.
3. Immediately release all funds designated by the insurance
company as “emergency” or “advance” funds.
4. Permit submission of required documentation via fax and
email. Storm Sandy-related faxes and emails should have a
separate, designated fax number and email address to expedite
5. Minimize the amount of documentation required during each
phase of repair.
6. Hold all insurance proceeds in an interest bearing escrow
account for the homeowner’s benefit.
7. Process all mail on the day of receipt.
8. Upon receipt of complete documentation, release proceeds the
day of receipt.
9. In the event that they receive incomplete documentation,
notify the homeowner immediately with detailed instructions on
additional requirements.
10. For those with branches, accept paperwork and endorse checks
at all branch locations.
11. Where proceeds cannot be released in person at a branch
location, disperse funds via electronic transfer or overnight
12. Require inspection only if specifically required by investor
13. Where inspection is required, deploy inspectors within two
days of becoming aware of the homeowner’s request for such
14. Conduct all inspections at the servicer’s own expense.
15. Upon receipt of proof that homeowner is seeking only
reimbursement for money already expended on home repairs, issue
check or electronic transfer directly and exclusively to the
16. Maintain sufficient staff to comply with all of the above
(sgp) NY 
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