NEW YORK—Some $208 million in insurance funds from Hurricane Sandy have been withheld by banks for victims who need the money for repairing their damaged homes, said Gov. Andrew Cuomo.
Wells Fargo, Bank of America, JP Morgan Chase, and Citibank—the four largest banks in the country—are holding 4,159 checks worth around $131 million, Cuomo said, citing a Department of Financial Services investigation into the matter.
“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,” Cuomo said.
Twenty-three other servicers are holding the rest of the checks that, according to Cuomo’s office, were supposed to be doled out to homeowners who need the cash for necessary repairs. In all, proceeds are being held for 6,611 borrowers.
These banks should “use maximum discretion” to send the relief money to homeowners “as quickly as possible,” the governor added.
Cuomo noted that the banks have to get proof of repair work before releasing the money, which has caused some of the delays. However, some of these homeowners have not yet been able to return to their homes.
New York’s Superintendent of Financial Services, Benjamin M. Lawsky, said that the state came to an agreement with banks to free up some of the insurance money for Sandy-hit homeowners, but claimed that these financial institutions have not handed out the proceeds quickly enough.
“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,” Lawsky said.
Cuomo’s office said it sent letters to Fannie Mae and Freddie Mac for “emergency reforms.”
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