Some Habitat homeowners cashed hailstorm claims checks

A yet-to-be determined number of metro Jackson Habitat for Humanity homeowners spent insurance money received for damage from the March 18 hailstorm on expenses other than repairs to their homes.

About 350 of greater Jackson’s 560 Habitat for Humanity homes fell in the path of the late afternoon storm that dropped hail larger than baseballs throughout 18 Central Mississippi counties, leaving behind extensive damage to buildings and vehicles.

Cindy Griffin, executive director of Habitat for Humanity/Metro Jackson, suspects insurers may have been overwhelmed by the volume of claims and inadvertently sent claims checks to homeowners without requiring Habitat to co-sign them.

habitat-for-humanity1“A bunch of my houses had hail damage,” she said in an interview last week, but emphasized she has yet to determine how many diverted their repair checks to personal expenses.

“I don’t know the extent of what has happened,” she said. “I have had reports that some of the insurance checks did not list us a co-payee.”

Had correct procedures been followed in all instances, checks that went to Habitat homeowners would have required a signed endorsement from the faith-based home building organization, which as the mortgage provider is the lien holder on the homes.

Money from the checks would then go into individual accounts with funds released at each stage of the home repairs. “We would release the money as the contractor invoices came in,” Griffin said.

Insurers typically follow a similar procedure, a circumstance that could limit the headaches endured by Habitat for Humanity/Metro Jackson over the misspent claims money. Insurance companies, having learned from the massive rip-offs of insured homeowners by unscrupulous contractors during Katrina, typically send only enough in initial claims checks to initiate the homeowner repairs.

The metro Habitat chief said she has alerted the organization’s governing board to the problem.

Habitat sells the homes at cost to buyers with modest incomes after closely vetting potential buyers and having them undergo training in the responsibilities of homeownership.

Habitat remains the servicer of the mortgages even though it sells the mortgages to the Mississippi Home Corporation, a quasi-public entity that promotes housing opportunities for Mississippians. In a revolving loan arrangement, money provided for the mortgage purchase on one home is put toward building the next Habitat home, explained Scott Spivey, spokesman for the Mississippi Home Corporation.

The hailstorm produced 40,000 homeowners and automobile claims, the Mississippi Insurance Department says.

By mid April, carriers reported they had paid out more than $25 million in damages on nearly 10,000 homeowners claims and more than 31,000 auto claims from the storm.

The Department of Insurance expected claims to reach 60,000.

Insurance Commissioner Mike Chaney reported the department had received very few complaints about the claims process.

State Farm, the leading insurer in Mississippi, told the insurance industry website Property Casualty 360 in mid April that it had received about 15,790 auto claims and 6,575 homeowners claims in Mississippi.

 

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