GRIZZLY PLATS (CBS13) – Does your lender pay your fire insurance premiums from an escrow account? Better to check that these payments are made.
A Grizzly Flats family who lost their home to the Caldor fire have learned that their lender failed to pay fire insurance premiums after their loan was sold.
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âIt’s not OK,â said Rebecca Green, whose family of five are now homeless and crammed into a friend’s house, her oldest son sleeping outside in a tent.
âOur house is gone; it is completely destroyed; there’s nothing left, she said.
The evacuation was chaotic as they chose what to grab.
âAt that point you make the decision, you know, ‘well we’ve got covered, we’ve done what we need to do, we’ve got insurance, get the family, take the pet and go.’ “she said. noted.
First came the shock of losing everything, then another blow. The fire insurance company denied their claim due to a default – a payment their lender was supposed to make from their escrow account.
âI don’t understand how this happens,â she said.
When they bought the house in 2019, regular home insurance did not cover a wildfire, so they purchased a separate policy, the insurance of last resort called the Fair Plan. The mortgage deal called for the bank to take the two premiums as part of the monthly payment for the family’s house.
But when the lender sold their loan, the new company, Mr Cooper, paid the home insurance bill but not the fire insurance, meaning their burnt down home was not covered by the Fair Plan policy.
âWe are strugglingâ¦ we are looking at the possibility of having to divide our family and go in different directions, in different states,â she said.
Insurance attorney Amy Bach thinks we’ll see more confusion with lenders as more Californians are forced to purchase Fair Plan policies for fire protection.
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“So there is a lot of risk that the paperwork will go wrong and things will fall through the cracks,” Bach said.
Federal law states that “if you maintain an escrow account … for the payment of taxes and insurance, the bank” must “make the payments in a timely manner.”
âAs long as it’s not the owner’s fault, there is a cure,â Bach said.
The law says, “The bank must either contact the insurance company and have the policy reinstated or purchase a policy from another insurer on your behalf.”
We contacted Mr. Cooper and they did not tell us what had happened with this unpaid invoice, but said, “Our hearts are with Ms. Green and those affected by the recent fires.”
Then we got the news to end this insurance nightmare. The lender said: “We can confirm that Ms Green is covered for damage sustained in the fire.”
âI slept through the night last night. I slept well for the first time since all of this happened, âsaid Green.
Now they know they will have a home while they rebuild their lives.
“I couldn’t have done anything without your help,” she said.
Green said Fair Plan warned her last year that the police were unpaid. She said her insurance broker had forwarded it to Mr. Cooper for him to pay. Mr. Cooper did not confirm whether they received this letter.
The Greens got their first insurance check covering six months’ rent. They expect to exchange this tent for a rental house within two weeks.
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Fire victims with police issues can get help from the California Department of Insurance. The agency will provide you with a personal contact to deal with your case. You can call them at 1-800-927-4357 or open a ârequest for assistanceâ through their website.