Did Wells Fargo Home Mortgage apply your NFIP Flood Insurance or Disaster Insurance toward your mortgages unpaid balance?
By Murray Wennerlund published 11-3-2022 updated 11-3-2022
By Murray Wennerlund published 8-14-2022 updated 9-25-2022
No scheduled draw of grant funds awarded to any homeowner. Grant funds once awarded make the homeowner eligible for reimbursement payments.
Reimbursements are calculated by what the Restore Louisiana Homeowners program determines during one of their 4 scheduled inspections to how much work has been completed. If you do not use the Xactimate economy costs for labor and material provided by the state you may find yourself overbudget and paying out of pocket to complete enough work to qualify for a reimbursement payment.
Since 2014 the states have changed their focus from grant funding as a distributed draw to a fully reimbursable program using state hired inspectors and predetermined costs for allocations of the grants. The costs used by the states do not match real world costs for labor and material which the homeowner would have to pay out of pocket any additional costs for repairs.
Example: If a home's roof was destroyed by a hurricane and the homeowner didn't have insurance for the roof the state would offer a HUD CDBG-DR Grant. The grant award amount would be based on the states standards not than professional inspector or estimator. In fact the state would most likely use the lowest cost of material and labor standards that the Xactimate program would allow and being the insurance industry standards for adjusters you can not argue the usage of the software.
If the roof costs $50,000 to replace by a contractor and the state says they will only give $30,000 based on the states estimates the homeowner would have to provide out of pocket the additional $20,000 to be eligible for the $30,000 in reimbursement grants and paid only when all $50,000 worth of repairs are completed and inspected by the state.
The reimbursement amount of $30,000 comes from unmet needs based on what the state determined your actual repair costs should be. The remaining is your choice to pay more for repairs and the state makes it very clear that you'll cover the overages before they will allow grant funds to be released.
One could argue this to be income segregation or in part inequality. But in fact it's savings, cash on hand, credit available, loans available segregation. The more cash in the bank you have means the faster you would be reimbursed. If you were able to secure a private loan you would be reimbursed in the amount determined by the state.
Louisiana has proven this method to work time and time again with it's 100% reimbursement program offered to those who did not secure an SBA loan and used savings, retirement funds, credit and private loans to recover. While this is no fault of the persons who planned ahead and saved money it is a form of income, savings, credit, retirement segregation and was reviewed using a state public school teachers salary both while actively working and retired. In both cases, a typical school teacher would not have enough cash on hand or credit available to pay out of pocket for repairs. They would be forced into a loan which most likely would have been an SBA loan to which reimbursements are not calculated when funds secured by federal tax dollars are used. This would be a duplication of benefits and another issue that hit those with collateral but no means of repayment.
Talk to your state representatives about your state office of housing about their HUD CDBG-DR grants. Be sure you share with them a grant with drawn payments is better than a grant converted to a reimbursement program if your citizens don't all have at least $50,000 cash on hand. The $50,000 is based on construction of a small home costing $200,000 to build and the household doesn't qualify for a construction loan and has limited cash on hand.
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By Murray Wennerlund