Then, some interesting but legal maneuvers by two banks did a number on his bank account — a bank account that has nothing to do with the home or the mortgage on the property.
Strange as it may sound, the damage to the home caused Becker’s bank to put a hold on his savings account — essentially freezing it — so he was unable to access money he needed to make his daughter’s college tuition payments.
“Huh?” you ask. Yeah. We did, too, and we learned a few good lessons.
When Becker bought the home in 2009 with his brother and their two wives, the deal was relatively simple.
The two couples split the cost, but only Becker’s brother and his wife were on the mortgage, which they took with Wells Fargo.
All four of their names are on the deed to the house and on the property insurance, and the brothers opened a joint account at PNC to manage expenses for the home.
“As time went by, we were fixing it up, but then Sandy took it away from us,” Becker said. “Destroyed it.”
Fourteen days after the late October 2012 storm, Becker was finally allowed on the island to see the damage.
“We had 51 inches of water,” he said. “The insurance adjuster came and cut us a $10,000 check and said we had to stop the mold immediately.”
Then Becker started the clean-up.
“I noticed my foundation was severely compromised,” he said. “You can put a fist through the foundation.”
The insurance company sent an engineer to check out the damage before it paid additional money for repairs.
“Their engineer said the foundation is crumbling — not because of the storm, but because the foundation was old and from 1930,” Becker said. “Their engineer said this house is old, and although the water damage was substantial, they’re not fixing it. We were given another $19,000, claim closed.”
Becker said $19,000 was nowhere near enough to repair the home, but the four owners endorsed the check and deposited it into the same joint PNC account.
Becker said he used the funds to cut holes in the damaged flooring, disconnect electrical and plumbing lines, remove wiring and strategically shore up the house to stop any listing because of the foundation.
“You can’t repair the inside because the foundation is unsafe,” he said. “An idiot wouldn’t build on this foundation.”
But there would be no more insurance money, he said, so the brothers decided to hire an attorney to fight the insurance company. In the meantime, they said they had no choice but to wait.
AN UNPLEASANT SURPRISE
Many months passed and the Beckers waited, and waited more. Then a new fight appeared.
On March 21, Becker tried to use his personal PNC account — not the joint account he has with his brother, but a completely different account — to make a college tuition payment for his daughter.
The account was frozen.
Thinking he was a victim of fraud, he contacted PNC to see what was up.
Apparently, Wells Fargo, which holds the mortgage, filed what’s known as an endorsement claim, questioning whether or not the insurance checks that were deposited into the Becker brothers’ joint PNC account were properly endorsed.
Becker was furious and incredibly confused.
He said he was never notified by PNC that the account was frozen. He said his brother was never questioned by Wells Fargo. And if Wells had an issue, Becker didn’t understand why his personal account, rather than the joint account, would be frozen.
PNC wasn’t able to tell him more, so Becker tried to call Wells Fargo.
But Wells Fargo wouldn’t talk to him because he’s not on the mortgage.
So Becker’s brother set up a conference call with Wells Fargo’s mortgage division and the two brothers.
“She says, ‘Sir, we have no problem with you. We would never freeze a bank account. That’s illegal,’ ” Becker said the rep told him.
Yet the account remained frozen.
So he went back to PNC, and things got a little clearer.
Generally, when an insurance company makes a payout, both the insured and the bank that holds the mortgage are supposed to endorse the check. The mortgage company usually will hold on to the money, disbursing it as the work is done.
This is to ensure that the homeowner uses funds for repairs and not for a new car or a lavish vacation.
But when the Beckers deposited the insurance checks, they never had Wells Fargo endorse them.
That was a mistake, but an innocent one, Becker said, as they didn’t realize that was the process they were supposed to follow.
PNC made another mistake by accepting the checks — on two different occasions — without the Wells Fargo endorsement.
But PNC wouldn’t unfreeze the account.
“They took any damn money they could get their hands on. They snatched my kid’s tuition money,” Becker said. “Here I am trying to do the right thing, and they stick a knife in my back.”
That’s when he reached out to Bamboozled.
FOLLOW THE MONEY
We reviewed Becker’s documents and timeline, and we asked Wells Fargo and PNC to take a closer look.
In the meantime, we were surprised that Becker wasn’t notified about the account being frozen.
The state’s Department of Banking and Insurance (DOBI) said there is no state law covering notification.
The Office of the Comptroller of the Currency (OCC), which regulates national banks, said there’s no national law that covers notification, either.
Speaking generally, the OCC spokesman said accounts are often frozen when there is suspicion of some kind of fraudulent activity.
“Such notification could even compromise investigations, and waiting for notification to occur prior to suspension could result in additional fraudulent activity,” the spokesman said. Because “that sort of notification is not governed by law or reg, the bank’s obligation is established by its agreement — contract — with the customer.”
Indeed, the PNC website, on page 10 of its 28 page account agreement document, said: “We may exercise our right of set off without advance notice to you and without regard to any other right which we may have against you or any other person or entity. We may also freeze or place a hold on your account without setting off in order to investigate any dispute or claim.”
So much for notification.
PNC then called Becker, he said, and asked him to cooperate with its investigation. He said he promised to provide copies of all the repair receipts to prove he used the insurance funds properly.
Then Becker got a helpful informational call from DOBI, which he said resulted in a call from a Wells Fargo rep.
“She listened and there was constant silence. She was flabbergasted,” Becker said. “I said the money that was given to us was used to support the house and mold removal. I explained we were protecting the bank’s interest and not abandoning the property, and that we were suing the insurance company on Wells’ behalf and our own.”
He said Wells Fargo said it would send a new contractor to the property, and it asked for copies of the receipts to show how the insurance money was spent.
“She said, ‘If we’re satisfied, we can unfreeze the money,’ ” Becker said the rep told him.
He also spoke to PNC, which also asked for the receipts.
So Becker went about collecting and copying the receipts, but before he could send them in, he received another call from PNC.
“She said they’re going to lift the hold (on the bank account),” Becker said. “I just want to get my money before they change their minds.”
Glad that Becker’s funds were released, we reached out to Wells Fargo and PNC for further explanation.
Wells Fargo didn’t say much.
“We have reached out to Mr. Becker to discuss the situation and provided him with guidance that should help him resolve this matter,” a spokesman said.
Great, but we also wanted to know why his personal account was frozen instead of the joint account with his brother, whose name is on the mortgage.
“We filed the appropriate documentation when we discovered the missing endorsements on the insurance checks,” he said. “This action ultimately led to the account being frozen by the bank that cashed the checks.”
We translate that Bamboozled-speak to mean that Wells Fargo says PNC, and not Wells Fargo, made the decision about which account to freeze. And because the joint account didn’t have enough funds to cover the insurance payments in question and Becker’s account did, the low hanging fruit was the target.
We also asked about notification issues, but Wells Fargo said, “We’re not the bank that manages the account.”
We asked the same question of PNC, the bank that “manages the account,” but it pointed its finger back at Wells Fargo.
“The appropriate organization to ask is the group that makes a claim on a customer’s funds,” a spokesman said, refusing to discuss the details of customer accounts.
So that’s that.
Becker has his money back, but he’s still fighting the insurance company for repair funds for the home, so don’t be surprised if you hear more about his plight in an upcoming column.
If you’re having problems with your insurance company related to Sandy damage, check out DOBI’s mediation program. And make sure you double- and triple-check any endorsement requirements if you ever get a payout from your insurance policies.
Just in case.