The flood-insurance process has been more complicated. The couple knew to limit their cleanup work until a claims adjuster could review the damage. They expected to have to wait a long time, given the surge of claims. Clumps of mold started making them nervous, but they were relieved to get a call from Travelers two weeks after the storm saying that an adjuster from a Mobile firm it had contracted with to help handle claims would be coming to visit. Someone by a different name showed up from the Mobile company, but they didn't think anything of it. The adjuster toured the house, took careful notes, and drew diagrams; Motherway and Schanker documented his work on videotape.
Relieved to be able to start clearing away the soggy debris, the couple got to work almost immediately after the adjuster left. "It was a Sunday," Motherway recalls. "We were standing there, overwhelmed, and I said, 'What do we do now?' Jenn jokingly picked up a sledgehammer." A church group happened to be walking by and asked if they could help. "They helped us rip up almost half the house."
Then things got weird. About two weeks later, Motherway got a call from a man claiming he was their adjuster. "I thought I was being scammed," Motherway says. A call to Travelers led him to the Mobile firm, Southeast Catastrophe Consulting, which told him the first adjuster had not been authorized to visit his home. Southeast's president, Robert Evans, told MONEY that the adjuster had been fired and all his cases reassigned. A Travelers spokesman confirmed the story.
Back to square one. The new adjuster came but had a difficult time evaluating the full extent of the damage because by that time the house had been cleared and gutted. Their first payment from the flood insurer: $69,000. Motherway pushed to have an engineer analyze the foundation after receiving a code violation notice that it was cracked, netting him a couple of thousand more.
Another check from Travelers for nearly $13,000 arrived in September. The couple's experience is similar to that of many Sandy families, who have complained about the protracted claims process and settlement checks that come in dribs and drabs.
The $95,000 or so in payouts so far from Motherway's homeowners and flood policies isn't enough to cover the actual cost of repairs. To comply with more stringent building codes put in place after Sandy, the couple also need to install support piles to raise the house 10 feet.
Estimates that Motherway has compiled -- mostly from acquaintances in the construction business -- put the total project price tag at around $260,000. The current market value of the house: $204,000, down from $303,000 before Sandy. Meanwhile, Motherway still owes nearly $275,000.
Despite the high cost, Motherway and Schanker feel that rebuilding is their only viable option. No one would buy the property in its current condition, Schanker points out.
Without the funds to proceed with repairs, though, the couple are unsure of their next move. Initially they could afford to wait as they worked on getting their insurance settlement bumped up. After all, FEMA was covering their rent, and Wells Fargo, their mortgage holder, had granted them a six-month suspension on payments, as the bank did for all customers displaced by Sandy.
When the grace period ended in April and the bank started pressing for payment, Motherway and Schanker panicked and didn't respond. Neighbors and friends reassured them that the bank would eventually just tack the amount past due onto the back end of the loan.
Bad call. The notices from Wells Fargo demanding that Motherway, the sole title holder, resume payments of $2,148 a month, plus send the amount past due -- by then, about $13,000 -- became more threatening. The latest communication used the F-word: foreclosure. Motherway's initial unresponsiveness hasn't helped his cause.
"We are trying to be flexible. We have offered extensions of the moratorium period," said Marie Day Hayes, a senior vice president for Wells Fargo, when asked about Motherway's loan. "If the customer is in that situation, they need to have a conversation with us."
The couple have since made tentative attempts to resolve the issue. After getting bounced among different bank representatives, Motherway was finally connected to a disaster-relief specialist in September, but says he was told he was not a candidate for loan modification because his house is not habitable.
Instead the bank offered to reduce his payments for three months to $1,600 a month; after that, he'd have to send in the past due amount and resume regular mortgage payments. Motherway sent a check for $1,600 for October, then stopped when he realized he couldn't sustain the payments.
Even without the mortgage mess, Motherway and Schanker would be in trouble. Since most of their furniture was destroyed in the storm, they bought new pieces for the apartment, putting the purchases on credit cards. Between that and the loans for their new cars, they're shelling out about $2,500 a month.
After repairing the boiler and electrical panel, they're also paying utility bills for both the apartment and the house -- they need lights in the house so they can work on it and heat so the pipes don't freeze. Meanwhile, premiums for their homeowners policy have doubled. State Farm has been pulling out of coastal New York because of the higher risk of severe weather and did not renew their policy. Unable to find alternative coverage, Wells Fargo "force placed" them with an expensive specialty carrier.
After reviewing their finances, certified financial planners Mark Sallinger and Michael Terry of MTP Advisors in Maspeth, N.Y., initially believed the challenges the two face are so severe that Motherway might need to declare bankruptcy.
"Even if you take the mortgage out of the equation, you're barely keeping your heads above water," Sallinger told them in an early meeting. Bankruptcy, he said, would free the couple of their biggest debts and wouldn't affect Schanker's credit standing, since the two aren't married and the house is in Motherway's name only.
That suggestion did not go over well. "It feels wrong to walk away and let the whole thing defeat us," says Schanker. "We're not ready to give up."
Working with Motherway and Schanker for several weeks more this fall, Sallinger, Terry, and Jeffrey Gould, a private insurance adjuster from Baltimore, re-assessed the couple's options. The experts came up with a plan to get the family out of the quagmire.
File an amended claim -- stat. Multiple go-rounds with adjusters are common with complex insurance claims, says Gould. Flood programs are particular sticklers for details, demanding exhaustive documentation. After a major storm, Gould also notes, adjusters are loaded with claims and may rush, miscoding items in estimating software or missing them altogether. Small oversights can add up quickly.
All these factors came into play with Motherway's claims, says Gould, who was able to identify dozens of items that either were missing from the original claims or had been underestimated. For instance, there was no listing for the baseboard heating system on the first floor, which was destroyed by flooding, or for a damaged crawlspace. The original adjuster also didn't note certain upgraded materials, such as higher-quality wood subflooring.
After getting detailed estimates for these items, Gould prepared a new 14-page claim for $112,000, or nearly $30,000 more than they've gotten from the flood insurer so far. "These are conservative estimates I'm confident they'll get," says Gould. The higher amount would bring the official damage total to more than 50% of the home's assessed value, qualifying Motherway for up to $30,000 in FEMA grants to help offset the cost of bringing the house up to code.
Get multiple bids for rebuilding. Even if the amended claim is successful, Motherway and Schanker will still not have enough to rebuild, if the estimates they've gotten are accurate. Gould urges the couple to get at least two bids from general contractors experienced with flood damage, rather than relying on piecemeal estimates from individual plumbers, electricians, and other workers. The adviser believes repairs to the 750-square-foot first floor, plus the support piles, should run far less than the $260,000 Motherway initially quoted.
The couple can also help close the gap by applying for a low-interest loan from the Small Business Administration, which provides disaster relief to homeowners as well as businesses. The couple already received a $30,000 SBA loan to help replace their appliances and furniture since they did not have contents coverage. Their amended insurance claim would qualify them for up to $40,000 more.
Clean up the mortgage mess. Sallinger says it's imperative for them to negotiate a new deal with Wells Fargo. Ideally they'd be allowed to make reduced payments of $1,200 a month until they're back in the house, then tack on the past due amount to the principal. At the least, the couple could accept the bank's offer to pay $1,600 a month for three months, then try to negotiate an extension until they've done enough work on the house to qualify for a loan modification.
Wells Fargo has indicated to MONEY the bank is willing to work with Motherway, but he'll need to keep the disaster specialist he's working with apprised of his progress in rebuilding the house and stay current with the reduced payments.
Erase the red ink. To boost their income, Sallinger suggests Schanker could temporarily reduce her 401(k) contributions from 13% to 6% (she'd still qualify for a full company match). Motherway, who helps support two older daughters, could also bump up his exemptions from two to six without triggering a tax bill, says his accountant, John Bernet of Port Jefferson Station, N.Y., who was brought in for consultation. Total extra income: $600 a month.
In addition, Sallinger proposes that Motherway and Schanker use part of the proceeds from their low-interest SBA loan (monthly payment: $125) to erase their high-interest credit card debt (monthly payment: about $1,700). Replacing Schanker's BMW with a cheaper, used vehicle could drop her car payments by more than half. Along with smaller cuts in discretionary expenses such as meals out, these steps should bring the couple's expenses in line with their pay.
Get better, cheaper protection. Motherway might be able to lower his homeowners premiums by buying "builder's risk" insurance, which provides coverage during renovations, from a specialty carrier. He might also get a lower-priced policy through the state-backed insurer of last resort, New York Property Insurance Underwriting Association. Once the repairs to the house are done, Motherway can reapply for traditional insurance.
One extra insurance expense the couple should take on, Terry says: life and disability protection. Around $84 a month will buy a $500,000 term policy for each of them, according to Accuquote. Terry also recommends disability insurance for Motherway, the higher earner; roughly $165 a month buys him $5,000 in monthly income.
More hopeful after hearing the recommendations, Motherway and Schanker say they'll do whatever it takes. They're keenly aware their situation could have been a lot worse: Two women drowned the next street over, as did the man who lived on the corner. Nugent Avenue itself remains lifeless; many of their neighbors haven't been able to go home yet either.
Reflecting back over the past year, the couple are also quick to point out that not all of it has been bad. "So many people have been generous and kind to us," says Schanker. Still, they're eager to move on and to finally be able to put Hurricane Sandy behind them. Says Motherway: "You just hope it's the kind of storm that happens only once every 100 years."
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