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6 investigates: Mortgage company withholds Hurricane Harvey insurance money

Posted: 5:11 PM, Apr 16, 2018
Updated: 2018-06-27 14:00:18-04

Rebuilding from Hurricane Harvey has become long and especially frustrating for many in South Texas whose homes and businesses were badly damaged.

But for Jimmy Kendrick, that frustration is not for a lack of money.

Kendrick received an insurance check to rebuild his home, but seven months later he’s run into an unlikely stumbling block: his mortgage company.

“It’s like a mafia out there that wants to shut you down and keep you from being successful,” Kendrick said. “And my mortgage company has been my mafia.”

If Kendrick’s name sounds familiar, it’s because he’s also the mayor of Fulton – a coastal city that took the brunt of the hurricane’s powerful winds. The eyewall of the storm passed over the city. Peak wind gusts registered at 152 miles an hour, according to the National Weather Service.

And with those winds, went Kendrick’s roof – like so many others in his community.

“I sat here and watched my house start coming apart,” Kendrick said, who sheltered with city officials in public building a block from his house.

And when the storm passed, Kendrick, like so many others, followed the process to rebuild. He filed a claim with the Texas Windstorm Insurance Association. The state sent someone to look at the damage. And eventually, Kendrick and the state agreed it would take about $38,000 to rebuild his home, which required an entire roof replacement.

TWIA sent a check for the agreed amount. When it arrived, the check required that Kendrick receive an endorsement from his mortgage company – Selene Finance, out of Houston. But instead of endorsing it, Selene Finance asked Kendrick to sign over the check because it had an interest in the property, he said.

And to gain access to his insurance money, the mortgage company required Kendrick to provide detailed paperwork about the contractor and repairs. That kind of paperwork is a common requirement by most mortgage companies, according to industry experts.

But that’s where things went south, Kendrick said.

He sent the information requested, but each time he said it wasn’t enough to satisfy the mortgage company. 

"They won’t release money to me,” Kendrick said. “I’m being strong-armed all the way around in everything I do, and it’s not TWIA’s fault. It’s my mortgage company’s issue with me about me not meeting all their standards they want me to meet."

One of those standards required Kendrick to hire a state-licensed contractor, he said. The state of Texas does not require contractors to be licensed.

”I had to argue with them on that." Kendrick said.

Selene Finance would not discuss Kendrick’s situation because of privacy concerns, but confirmed the company is working with Kendrick, said Susan Fitzpatrick, a spokeswoman for the company.

After KRIS 6 Investigates contacted the mortgage lender, Kendrick said he received a call from the company and was told a check was on its way. On Friday, Kendrick received a check for half of the insurance money he is due from Selene Finance.

But Kendrick’s complaints about Selene Finance are not isolated.

More than 50 complaints have been filed with the Texas Attorney General’s Office dating back to 2012. At least one complaint included problems accessing insurance money, similar to what Kendrick described.

Separately, the Better Business Bureau of Greater Houston gave an F rating to Selene Finance, which has 158 complaints on file. All but three have been resolved, said Denisha Maxey, senior director for Dispute Resolution with BBB Greater Houston. Some complaints were about late fees being charged without reason and others alleged escrow funds were not being used to pay property taxes and insurance bills.

In a complaint to the BBB, Juan and Sandra Leal of Palm Beach, Florida complained about a situation that sounded similar to Kendrick’s.

A few weeks before Hurricane Irma hit Florida, the Leals mortgage was sold from National Mortgage to Selene Finance, Leal said, in a recent phone conversation when contacted by 6 Investigates. The hurricane badly damaged Leal’s roof to the point that it needed to be replaced.

Like Kendrick, Leal filed an insurance claim and received an insurance check to get the work done. The check needed to be endorsed by Selene Finance. But instead of releasing the funds, so Leal could hire a roofer, the mortgage company cashed the check and held on to the money.

“They told me that they kept the check because they have as much interest in my property, so they need to administer the money,” Leal said. “I said ‘no, I can’t work like that.’”

Leal had no choice. He submitted the paperwork Selene Finance required so he could pay the roofer, Leal said. But it took three and a half months for Selene Finance to send him the total amount due so he could pay the roofer. And the company still owes him insurance money, Leal said – a remaining $4,000, so he can finish repairing the damage inside his home.

Back in Fulton, Kendrick and his wife are wondering where that leaves them. Hurricane season is two months away, and their house is a construction zone.

They’re fed up.

“This is not their house,” he said. “This is my house. I pay every month. I paid yesterday a $1,300 note on this house

But Kendrick said he is optimistic he will be able to repair the house in time for the start of hurricane season.

If you find yourself in a similar situation, the BBB of Greater Houston offered these tips:

Ask the mortgage lender to show you where it says you are required to sign over an insurance check.

Request a copy of the requirements and the process for being reimbursed with that money. 

If all else fails, file a complaint with the BBB where the company is headquartered. 

In Texas, you also can file a complaint with the Texas Department of Savings and Mortgage Loan

If you suspect fraud or criminal activities, file a complaint with the Texas Attorney General’s Consumer Protection Division.