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 6-29-2018 updated 1-11-2022
Here in the State of Louisiana I've been working with victims of the 2016 Floods both online in Facebook group Restore LA Program Info Exchange. You are welcome to join the Facebook.Com group.
I started researching the Louisiana Office of Community Development - Disaster Recovery Unit just about 5 months ago, around the beginning of Feb. 2018.
I would read what people posted in our group then try to match that with policy and procedure published by the OCD-DRU state agency in their website.
Many times the information was not public so I would need to use the Public Document Request system which is very hit and miss based on the fact it's not a email support ticket system, it's just email and hope within all the junk mail they find your question. I've worded my request as advised under state law and made it shorter and more human. I find a simple, Good Morning, I respectfully request.... works best, always put your full name, city, state and zip and i offer my phone number but they will email if they have questions.
After all that, what do you do to make it know you suspect something is amiss.
The documents state you should take matters up with the actual agency.
I've done that, emailed, called and posted. When the agency responds I try to find the documents that support their statements. Again, it's a long process but has to be done.
Today I have completed the part of the process that requires me to contact the agencies director and upper management for their input and help. Once that was complete and I'm still seeing things amiss I bring this to the attention of our congressional representative's constituent services so since I'm in District 6 I'll be touching base with Congressman Graves which can be done via Facebook.com, email, phone call or a pubic website like this asking him to read. He does have people that search Facebook discussions to see what's going on in his part of the state. Wish others would do the same.
Now that we are working with our constituent services we can then start programming our next phase which is depending on what the issue is about.
For the issue I'll be using as an example it's a Federal Law that is not being followed by a State Agency.
This law will be affecting Flood and Hurricane Victims in Texas, Puerto Rico, Florida, Indiana, and every other state that might have been hit by a disaster after Feb. 2018.
There was a law, a public law 115-123 that passed and is signed by the President of the United States of America.
This law clearly states that any Low income to Moderate income family that declined to accept an SBA Disaster Loan would not be penalized for the amount of the loan as Duplication of Benefits.
U.S. Senators Marco Rubio (R-FL), John Cornyn (R-TX), John Kennedy (R-LA), Bill Cassidy (R-LA), and Bill Nelson (D-FL) urged U.S Department of Housing and Urban Development (HUD) Secretary Ben Carson to not penalize hurricane victims who apply for Small Business Administration (SBA) assistance but ultimately decline it in favor of other options. Full report here.
What became a simple request ended up to be a full passage and law in the H.R. 1892 bill.
"Provided further, That with respect to any such duplication of benefits, the Secretary and any grantee under this section shall not take into consideration or reduce the amount provided to any applicant for assistance from the grantee where such applicant applied for and was approved, but declined assistance related to such major declared disasters that occurred in 2014, 2015, 2016, and 2017 from the Small Business Administration under section 7(b) of the Small Business Act (15 U.S.C. 636(b))"
Full Text of H.R. 1892 - Bipartisan Budget Act of 2018 can be found here.
Everything was introduced and added to the H.R.1892 - Bipartisan Budget Act of 2018 that was sponsored by Rep. Larson, John B. [D-CT-1] and introduced 04/04/2017
Rep. King, Peter T. [R-NY-2]* 04/04/2017
Rep. Pascrell, Bill, Jr. [D-NJ-9]* 04/04/2017
Rep. Reichert, David G. [R-WA-8]* 04/04/2017
Rep. Walz, Timothy J. [D-MN-1]* 04/04/2017
Rep. Ruppersberger, C. A. Dutch [D-MD-2]* 04/04/2017
Rep. Rutherford, John H. [R-FL-4]* 04/04/2017
Rep. Fitzpatrick, Brian K. [R-PA-8]* 04/04/2017
Rep. DeLauro, Rosa L. [D-CT-3]* 04/04/2017
Rep. Esty, Elizabeth H. [D-CT-5]* 04/04/2017
Rep. Grijalva, Raul M. [D-AZ-3]* 04/04/2017
Rep. Cohen, Steve [D-TN-9] 04/25/2017
Rep. Poe, Ted [R-TX-2] 04/26/2017
Rep. Swalwell, Eric [D-CA-15] 04/26/2017
Rep. Farenthold, Blake [R-TX-27] 04/26/2017
Rep. Renacci, James B. [R-OH-16] 04/27/2017
Rep. Messer, Luke [R-IN-6] 05/15/2017
With that said let's return to my example complaint about a state agency not following federal law signed by the President of the United States of American and introduced into law by all our Representatives listed above.
In my opinion I would be very upset if I worked to make a law only to find that a director of a state agency simply would defy the law makers and simply ignore the public law 115-123 and blame it on HUD and Congress. It's clear in the copy/paste short version above that our law makers made it so ANYONE that DECLINED the SBA LOAN should not have it used to penalize the homeowner and household.
"...shall not take into consideration or reduce the amount provided to any applicant for assistance..."
The State of Louisiana Office of Community Development - Disaster Recovery Unit director Patrick Forbes took it upon itself to rework the HUD guidance to avoid following the Public Law 115-123 by simply amending the states Administrative Manual version 3.8 (3.7 listed online) Exhibit 2-5 - DOB Policy and Exhibit 2-6 - Sample DOB Policy which also was added to the Restore Homeowners Manual version 3.1 on page 52 Declined SBA Award Policy.
Here's from the Administrations Document and Archives people.
The "Declined SBA Award Policy" is found on page 52 of the manual you refer to in your email below. This is the current policy: "Applicants who have applied for an SBA loan but have a record of declining the loan or have not executed the SBA loan may be considered for RLHP funding, but awards will be adjusted to account for any SBA DOB. If a low to moderate income (LMI) household has declined an SBA loan, a hardship will be presumed and the SBA loan will not be considered a duplication of benefit. SBA loan declination is defined as an applicant having never executed the SBA loan documents." When the "verification" paragraph states: RHLP Declined SBA Award Policy it is referring to the paragraph above it in the manual (see snip image below).
The first part in italic font shows the state is clearly not following the federal public laws 115-123.
The second part regarding low to moderate income allows the state of Louisiana to uphold the public laws 115-123 in part but to date they are denying low income and moderate income homeowners any HUD CDBG-DR funds based on their SBA Approved Loan Amount even when they declined to take the loan.
Again, the state of Louisiana Director of Community Development - Disaster Recovery Unit is defying our law makers.
I can say this because I am part of a group, 3 homeowners as of this date that have posted, called and emailed about this issue only to be sent the same information you see in this page.
Either you allow Disaster Victims to decline the SBA Loans or you tell them they have to take it or it will be used to penalize you later. No matter what the case, if the household couldn't afford the loan the State of Louisiana is using the loan amount as Duplication of Benefits against then. If you declined the loan because the SBA told you your NFIP money would pay it off in 3 months so you declined to take it will be used against you.
In the State of Louisiana people have been waiting for news after Feb. 2018 regarding the SBA Loan issue.
The news is rolling out now and not a much noise is being made of it.
Declined a retirement couple that spent their life savings and pension on repairs and only needs matching to complete the home. They could be completed with $20,000 in federal grant funds from HUD but SBA offered $40,000 which is used as Duplication of Benefits and penalizes the family. This is an extremely low income family.
Declined a SBA Loan by a nurse who inherited a home that was paid off by their family. Not in a flood zone, no flood insurance, SBA offered $60,000 which was declined. Now $60,000 is used to penalize this Low Income household.
Declined a SBA Loan by a Not for Profit employee, was told by the SBA that the loan would be secured by the NFIP the homeowner had. The loan would have been paid off in 3 months if taken but the logic behind taking a SBA Loan that was going to take the flood insurance as payment was not present. The homeowner declined the SBA Loan, moderate income.
All three of my homeowners are within the LMI range. 80% AMI or lower and all 3 were denied HUD grants based on the fact they declined the SBA Loan. The SBA Loan appears as a duplication of benefits in each of their grant award notices and draws down to zero their grant awards.
Is your builder using at least HUD Housing standards to build your new home?
By Murray Wennerlund