Lew Sichelman
These days, disasters like wildfires, tornadoes, floods and hurricanes are more powerful – and more frequent – than ever. It’s increasingly likely that wherever you live, your home will be hit one way or another.
You already know it’s crucial to be prepared for such an emergency, but what happens afterward is just as important.
The first step, per the nonprofit Consumers’ Checkbook, is to assess your property and take any necessary steps to prevent further damage. If a falling tree put a hole in your roof, for example, put up a tarp as soon as it is safe to do so. Otherwise, subsequent damage to furnishings that were unscathed from the original event may not be covered by your insurer.
Next, take pictures or videos of the damage, whether it’s the structure, your belongings or both. Capture how everything looks in the immediate aftermath before starting to clean and repair damaged items. Consumers’ Checkbook advises people not to dispose of anything until an insurance adjuster has examined it, and to keep receipts for any expenses. Most policies cover those costs.
If you need help repairing your place, make sure you hire reputable contractors who don’t ask for cash up front. Before signing a contract, make sure the pros are licensed and bonded. If you have the time, check their references.
Beware of fly-by-night contractors who work out of their trucks, make hasty estimates and demand half the money in advance. These storm-chasers might do some work, but usually won’t finish – instead, they’ll hightail it out of town to the next disaster, leaving unhappy homeowners in their wake.
“Withhold as much payment as possible” until the job is done, advises a post on the Consumers’ Checkbook website, checkbook.org. “If the repair work is extensive, the contractor may ask for periodic partial payments … but no reputable contractor should request full payment in advance.”
Be Ready for Insurance Claim
After you’ve secured your house, call your insurance company to file a claim. Many insurers have disaster units that swarm into affected areas to help their clients when a calamity occurs. But be patient: They may be overwhelmed with customers in the area, and they tend to take the worst cases first.
When the adjuster shows up, the Insurance Information Institute (III) said, have a list of damaged items ready to show them, and point out any structural damage. To substantiate your losses, hand over any receipts that you still have – just make copies of them first.
Be persistent, too. If your insurance company’s claims department seems to be moving too slow, call your agent to light a fire under the claims adjuster. If you still feel like you’re getting nowhere, complain to your state’s insurance department. That office holds a lot of sway, and often resolves complaints in consumers’ favor.
Another option is to hire a private insurance adjuster. A private adjuster does the same job as the company’s, only they work for you. Many private adjusters once worked at insurance companies, so they know how to get through all the legalese to the heart of the matter. They’ll take a cut of what your insurer eventually pays, but it may be worth that much – and more – to remove that burden from your shoulders.
Next Step: Call Your Loan Servicer
Your next call should be to the company that collects your monthly house payments: usually a loan servicer. This outfit collects your payments, makes sure your insurance and taxes are paid and distributes the remainder to the investor who actually owns your mortgage.
Notify the servicer that your place has been severely damaged or is uninhabitable. Armed with that information, the company may be able to let you slide for a few months until you can move back in. All government-related agencies that touch mortgages – Fannie Mae, Freddie Mac, the Federal Housing Administration, Veterans Affairs and the Rural Housing Service – have rules about forbearance, and many private lenders follow their lead.
“The rules are essentially the same,” said Donna Schmidt of DLS Servicing, which provides loss mitigation and default services for investors. “If a borrower’s property or work was adversely impacted, the servicer may offer a forbearance period.” This period gives you some financial relief until you return to work or complete the repairs to your house.
During that time – “usually about three months,” Schmidt said, “with extensions if necessary” – the servicer will agree to let you make partial payments, or even no payments at all, and they cannot report delinquent payments to the credit bureaus for the duration.
But remember: The missed payments must eventually be made. Once you can begin paying again, said Schmidt, the servicer will discuss the various options. One might be to modify the loan by extending the terms. Another might be to place the missing amounts into a second lien, which need not be paid back until you sell the house or otherwise pay off the primary mortgage.
To help you rebuild, you might also be eligible for a grant from Uncle Sam. Your state may be able to kick in a few bucks, too.
At the federal level, the Federal Emergency Management Agency makes assistance available to homeowners and students to cover uninsured losses. And through the Rapid Unsheltered Survivor Housing program from the Department of Housing and Urban Development, local jurisdictions are given money to disburse to people in declared disaster areas who are about to become homeless, or who are already without shelter.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
