BOULDER COUNTY, Colo. — In one week, Steve On Your Side was able to help two Marshall Fire survivors get a total of more than half a million dollars being held by their mortgage companies.
If a homeowner loses their home while still paying their mortgage, an insurance company is required to pay any damages directly to the mortgage servicer for the homeowner's loan. The servicer can then hold the principal of the loan while a home is being rebuilt, slowly disbursing the money to pay bills along the way.
But many Marshall Fire survivors have contacted 9NEWS, complaining that the process to get paid that money is opaque, with mortgage servicers requiring inspections of progress and not disclosing at what points money can be distributed. Others have complained the mortgage servicers are allowed to hold the loan principal while homeowners are still required to pay monthly mortgage payments.
Marc Hughes called Steve On Your Side last week, frustrated as his mortgage servicer, PNC Bank, continued to list his home as only 5% complete, when an inspector had indicated the home was closer to 80%. After Steve On Your Side contacted PNC Bank, a staffer from the bank contacted Hughes and offered to overnight a $125,000 check.
On Monday, while reporting on a legislative effort to create rules for mortgage servicers holding insurance money, Steve On Your Side met Bret Fulton, who was 90% complete on his rebuild in Boulder County. His mortgage servicer, loanDepot, was still holding onto all of his nearly $600,000 principal in insurance money. Fulton said loanDepot changed an inspector's assessment to keep the home's progress at 60% complete rather than 90%.
A day after Steve On Your Side contacted loanDepot for an update on Fulton's situation, someone contacted him and told him they would update his progress to 90% and send checks totaling $465,000. Fulton told 9NEWS the representative also said when the home was 95% complete, the company would send the rest of the money.
Neither PNC Bank nor loanDepot offered a comment to 9NEWS about either situation.
“You work with your insurance company, you fight for every dollar that you're owed, you're underinsured anyway," said state Rep. Kyle Brown, D-Louisville. "And then when you finally are able to get some money from your insurance company, the check is made out to your mortgage company, and you can't get access to that money in a timely way.”
At the state legislature, the House passed HB24-1011, sponsored by Brown, requiring mortgage companies to disburse one-third of the total amount immediately for a homeowner to begin the rebuilding process. It also requires the mortgage company to approve a rebuilding timeline and be transparent about goalposts consumers have to meet along the way.
The bill also requires the mortgage servicer to hold money in an interest-bearing account and credit any interest earned to the borrower's account.
The bill now moves to the Colorado Senate.
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