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CFPB: Nine Financial Problems After a Natural Disaster – and What You Can Do About Them

Investor Update
February 23, 2018

Source: CFPB

If a natural disaster has hit your community, you know the damage to your home and property also means big bills. To get back on track, you need to rebuild your finances as well as your home or business.

Read below for tips on common problems consumers have reported to us after a natural disaster. You can also read our blog on dealing with your finances after a storm, or browse our frequently asked questions in Ask CFPB.

Hurricanes, floods, wildfires, and their resulting financial problems

Hurricanes Harvey, Irma, and Maria, and the wildfires in California may be months behind us, but we know people continue to deal with the effects of these natural disasters and, for many consumers, there are financial issues that are just now beginning to surface.

To understand what financial issues may occur months after a disaster, we looked at what people told us after other natural disasters including Hurricanes Sandy and Matthew. Troubles with mortgages were most common, followed by debt collection, credit cards, and other loans.

9 financial issues you might face after a natural disaster

We heard some common themes from people who wrote to us after experiencing a natural disaster. 

1. Some people didn’t know that their accounts were going to collection.

  • Understanding the situation: If you had to leave your home or if your utilities and services are not working, companies may have a hard time reaching you. If a creditor or service provider cannot reach you, they may send any debts you owe to a collection agency. This can have a negative impact on your finances, and your credit reports and scores.
  • What to do: Set up a forwarding address, and update your information with each of your financial institutions. This way, they can contact you before problems begin.

2. Some people thought that when they contacted their lender or servicer for a loan deferral or suspension, the payments would be added to the end of the loan, and were surprised when the payments became suddenly due.

  • Understanding the situation: Lenders or loan servicers will sometimes allow borrowers to defer payments for a few months, and then expect the entire amount to be repaid immediately afterward. Depending upon the type of loan you have, your lender or loan servicer may be willing to temporarily reduce or suspend your payments. This is called forbearance.
  • What to do: If your lender or loan servicer offers you a deferral, forbearance, a moratorium or a loan modification, carefully study the terms of the offer. Once you have an agreement or understanding, be sure to document everything that was discussed. If you can’t pay your mortgage or are worried about missing a mortgage payment, call your lender or loan servicer right away. Ask if they are willing to work with you on a repayment plan.

3. Some people had trouble understanding their financial company’s disaster relief policies.

  • Understanding the situation: Many companies have special disaster relief policies. It’s important to know how these policies work so you don’t miss out on disaster assistance, or misunderstand how much money you owe and when.
  • What to do: Ask the company for written copies of any special disaster policies. Review them carefully to see how they apply in your situation. A HUD-approved housing counselor may also be able to help you, if you are dealing with an issue related to your home. These counselors are specially trained to help you assess your financial situation, evaluate options if you are having trouble paying your mortgage loan, and make a plan to get you help with your mortgage.

4. Some people had trouble paying contractors they had hired because their insurance check was being held by their bank or mortgage servicer.

  • Understanding the situation: Many people hire contractors soon after a disaster to quickly begin repairs on their home or business. Some mortgage agreements require any insurance checks to be made out to both you and the mortgage company or servicer. This may affect your ability to cash insurance checks as that company may need to approve it before you can cash the insurance check. Typically, your mortgage company or servicer will agree to release a portion of the settlement money before work begins so you can hire a contractor.
  • What to do: Before hiring a contractor to begin repairs, check with your insurance company and your mortgage company or servicer about how and when the insurance funds will be distributed. You should also review our tips for hiring contractors to fix or rebuild your home.

5. Some people found that they still owed money on their auto loans even after their car was declared a total loss by their insurance company.

  • Understanding the situation: When your vehicle is damaged, your insurance company assesses the value of your vehicle based on age, model, and other factors. Damage to your vehicle does not eliminate your responsibility to make your auto loan payments. When the cost of repairs is more than the value of the car, the insurance company may declare the vehicle a total loss.
    If the amount you owe on your auto loan is more than the insurance paid on your totaled car, you may owe the difference to the lender. This situation is sometimes called “negative equity.” Sometimes, people have a type of vehicle insurance called Guaranteed Auto Protection (GAP) insurance, which covers the difference between the amount due on the auto loan and the amount paid by insurance.
  • What to do: Clarify with your insurance company and your auto loan lender what type of insurance policy you have as well as what losses the insurance will cover and what you will still owe. After the insurance process is completed, if you owe more on the loan than the amount paid by insurance, you will owe that amount. If the amount of your insurance coverage is more than what you owe, then you will get paid the difference.
    In working with your lender and insurance, things can get confusing. Write down the names of the people you speak with and ask if there is a case number associated with your account that you can refer back to. Once you have come to agreement or understanding, be sure to document everything that was discussed.

6. Some people impacted by natural disasters reported that their accounts became overdrawn.

  • Understanding the situation: After a disaster, electrical blackouts and flooding can make it hard to send payments on time or to stop automatic payments. This can lead to overdraft fees.
  • What to do: Make it a priority to contact your bank or lenders quickly if you need to stop automatic payments or if you will miss a payment due to the disaster. Explain the situation that caused the late payments and ask for a waiver of any late fees. Also, get in the habit of making a monthly budget. That way, you’ll know what charges to anticipate. Our spending tracker is a great way to see where your money is going and track any trends in your spending.

7. Some consumers with debts with the Small Business Administration were sent to collections.

  • Understanding the situation: The Small Business Administration (SBA) only makes loans for help after a disaster. There may be grants available through the Federal Emergency Management Agency (FEMA). Grants do not have to be repaid. If you received a loan, it must be repaid or the accounts may be sent to collections, and that could negatively affect your credit.
  • What to do: Check your paperwork, and if you are still unsure, contact the SBA or FEMA to see if you have received a loan or a grant. If you are having troubles repaying the disaster loan, contact the SBA to find out your options. If your loan was sent to a debt collector and you are having trouble repaying it, you may also want to try and to negotiate a settlement with the debt collector.

8. After a natural disaster it can be difficult to stay on top of mortgage payments and other bills.

  • Understanding the situation: As you struggle to pay for home repairs and get back to work, you may begin to fall behind on house payments, seek loans to repair hurricane-related damage, or become unemployed. This can lead to ballooning credit card debt. Missing mortgage payments can lead to foreclosure.
  • What to do: Here are some steps you can take to help manage debt.
  • If you’re having trouble paying your mortgage, act quickly. Contact your mortgage servicer and a HUD-approved housing counselor to explain your situation and ask for help.
  • Review your income and savings and determine how much money you have available to pay bills and creditors.
  • If you can’t make a payment, contact your credit card company before it balloons into a problem.
  • Check with FEMA about programs you may be eligible for following a disaster. If you are in a presidentially-declared disaster area, you may qualify for disaster assistance.
  • Keep written records and other documentation of conversations with customer service representatives.

9. People affected by natural disasters can sometimes become targets for fraud.

  • Understanding the situation: Fraud is common after disasters. Scammers will offer to get you a loan modification or do home repairs for an upfront payment.  Sometimes, a scammer will even pose as someone from your insurance agency, your bank, or as a government employee.
  • What to do: Learn to recognize the signs of a scam. If you need a loan modification on your mortgage, contact your mortgage lender or servicer directly rather than going through a third party. You can also check with your state licensing agency to confirm the business is legitimate. If you suspect a scam, contact your local authorities.

Have more questions? How the CFPB can help

In the U.S. there were 16 weather and climate disaster events where losses exceeded $1 billion each in 2017.

  • Hurricane Maria devastated Puerto Rico, leaving many without power.
  • Hurricane Irma hit the Florida Keys, destroying 25 percent of their buildings.
  • Houston suffered historic flooding that displaced more than 30,000 people. The storm damaged or destroyed more than 200,000 homes and businesses.
  • Wildfires devastated parts of California, Montana, and other states in the west.

If you are struggling, you are not alone.

We also recognize that the months after a disaster can be a time of great stress. At the CFPB, we are here to help with tips and tools to help answer your questions about dealing with financial products and services.

If you have a problem with a financial product or service, we can also help you get a response from a company.

You can submit a complaint and we’ll forward it to the company and work to get you a response.

Submit online at consumerfinance.gov/complaint or by calling (855) 411-2372.

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CHIEF EXECUTIVE OFFICER

Alan Jaffa

Alan Jaffa is the chief executive officer for Safeguard, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to chief operating officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur of the Year® finalist in 2013.

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Chief Operating Officer

Michael Greenbaum

Michael Greenbaum is the chief operating officer for Safeguard. Mike has been instrumental in aligning operations to become more efficient, effective, and compliant with our ever-changing industry requirements. Mike has a proven track record of excellence, partnership and collaboration at Safeguard. Under Mike’s leadership, all operational departments of Safeguard have reviewed, updated and enhanced their business processes to maximize efficiency and improve quality control.

Mike joined Safeguard in July 2010 as vice president of REO and has continued to take on additional duties and responsibilities within the organization, including the role of vice president of operations in 2013 and then COO in 2015.

Mike built his business career in supply-chain management, operations, finance and marketing. He has held senior management and executive positions with Erico, a manufacturing company in Solon, Ohio; Accel, Inc., a packaging company in Lewis Center, Ohio; and McMaster-Carr, an industrial supply company in Aurora, Ohio.

Before entering the business world, Mike served in the U.S. Army, Ordinance Branch, and specialized in supply chain management. He is a distinguished graduate of West Point (U.S. Military Academy), where he majored in quantitative economics.

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CHIEF INFORMATION OFFICER

Sean Reddington

Sean Reddington is the new Chief Information Officer for Safeguard Properties LLC. Sean has over 15+ years of experience in Information Services Management with a strong focus on Product and Application Management. Sean is responsible for Safeguard’s technological direction, including planning, implementation and maintaining all operational systems

Sean has a proven record of accomplishment for increasing operational efficiencies, improving customer service levels, and implementing and maintaining IT initiatives to support successful business processes.  He has provided the vision and dedicated leadership for key technologies for Fortune 100 companies, and nationally recognized consulting firms including enterprise system architecture, security, desktop and database management systems. Sean possesses strong functional and system knowledge of information security, systems and software, contracts management, budgeting, human resources and legal and related regulatory compliance.

Sean joined Safeguard Properties LLC from RenPSG Inc. which is a nationally leading Philintropic Software Platform in the Fintech space. He oversaw the organization’s technological direction including planning, implementing and maintaining the best practices that align with all corporate functions. He also provided day-to-day technology operations, enterprise security, information risk and vulnerability management, audit and compliance, security awareness and training.

Prior to RenPSG, Sean worked for DMI Consulting as a Client Success Director where he guided the delivery in a multibillion-dollar Fortune 500 enterprise client account. He was responsible for all project deliveries in terms of quality, budget and timeliness and led the team to coordinate development and definition of project scope and limitations. Sean also worked for KPMG Consulting in their Microsoft Practice and Technicolor’s Ebusiness Division where he had responsibility for application development, maintenance, and support.

Sean is a graduate of Rutgers University with a Bachelor of Arts and received his Masters in International Business from Central Michigan University. He was also a commissioned officer in the United States Air Force prior to his career in the business world.

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General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard and oversees the legal, human resources, training, and compliance departments. Linda’s responsibilities cover regulatory issues that impact Safeguard’s operations, risk mitigation, enterprise strategic planning, human resources and training initiatives, compliance, litigation and claims management, and mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans over 20 years, and Linda’s experience covers regulatory disclosure, corporate governance compliance, risk assessment, executive compensation, litigation management, and merger and acquisition activity. Her experience at a former Fortune 500 financial institution during the subprime crisis helped develop Linda’s pro-active approach to change management during periods of heightened regulatory scrutiny.

Linda previously served as vice president and attorney for National City Corporation, as securities and corporate governance counsel for Agilysys Inc., and as an associate at Thompson Hine LLP. She earned her JD at Cleveland-Marshall College of Law. Linda holds a degree in economics from Miami University and an MBA. In 2017, Linda was named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.

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Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for the Control, Quality Assurance, Business Development, Accounting & Information Security departments, and is a Managing Director of SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Joe has been in a wide variety of roles in finance, supply chain management, information systems development, and sales and marketing. His career includes senior positions with McMaster-Carr Supply Company, Newell/Rubbermaid, and Procter and Gamble.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.

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AVP, High Risk and Investor Compliance

Steve Meyer

Steve Meyer is the assistant vice president of high risk and investor compliance for Safeguard. In this role, Steve is responsible for managing our clients’ conveyance processes, Safeguard’s investor compliance team and developing our working relationships with cities and municipalities around the country. He also works directly with our clients in our many outreach efforts and he represents Safeguard at a number of industry conferences each year.

Steve joined Safeguard in 1998 as manager over the hazard claims team. He was instrumental in the development and creation of policies, procedures and operating protocol. Under Steve’s leadership, the department became one of the largest within Safeguard. In 2002, he assumed responsibility for the newly-formed high risk department, once again building its success. Steve was promoted to director over these two areas in 2007, and he was promoted to assistant vice president in 2012.

Prior to joining Safeguard, Steve spent 10 years within the insurance industry, holding a number of positions including multi-line property adjuster, branch claims supervisor, and multi-line and subrogation/litigation supervisor. Steve is a graduate of Grove City College.

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AVP, Operations

Jennifer Jozity

Jennifer Jozity is the assistant vice president of operations, overseeing inspections, REO and property preservation for Safeguard. Jen ensures quality work is performed in the field and internally, to meet and exceed our clients’ expectations. Jen has demonstrated the ability to deliver consistent results in order audit and order management.  She will build upon these strengths in order to deliver this level of excellence in both REO and property preservation operations.

Jen joined Safeguard in 1997 and was promoted to director of inspections operations in 2009 and assistant vice president of inspections operations in 2012.

She graduated from Cleveland State University with a degree in business.

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AVP, Finance

Jennifer Anspach

Jennifer Anspach is the assistant vice president of finance for Safeguard. She is responsible for the company’s national workforce of approximately 1,000 employees. She manages recruitment strategies, employee relations, training, personnel policies, retention, payroll and benefits programs. Additionally, Jennifer has oversight of the accounts receivable and loss functions formerly within the accounting department.

Jennifer joined the company in April 2009 as a manager of accounting and finance and a year later was promoted to director. She was named AVP of human capital in 2014. Prior to joining Safeguard, she held several management positions at OfficeMax and InkStop in both operations and finance.

Jennifer is a graduate of Youngstown State University. She was named a Crain’s Cleveland Business Archer Award finalist for HR Executive of the Year in 2017.

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AVP, Application Architecture

Rick Moran

Rick Moran is the assistant vice president of application architecture for Safeguard. Rick is responsible for evolving the Safeguard IT systems. He leads the design of Safeguard’s enterprise application architecture. This includes Safeguard’s real-time integration with other systems, vendors and clients; the future upgrade roadmap for systems; and standards designed to meet availability, security, performance and goals.

Rick has been with Safeguard since 2011. During that time, he has led the system upgrades necessary to support Safeguard’s growth. In addition, Rick’s team has designed and implemented several innovative systems.

Prior to joining Safeguard, Rick was director of enterprise architecture at Revol Wireless, a privately held CDMA Wireless provider in Ohio and Indiana, and operated his own consulting firm providing services to the manufacturing, telecommunications, and energy sectors.

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AVP, Technology Infrastructure and Cloud Services

Steve Machovina

Steve Machovina is the assistant vice president of technology infrastructure and cloud services for Safeguard. He is responsible for the overall management and design of Safeguard’s hybrid cloud infrastructure. He manages all technology engineering staff who support data centers, telecommunications, network, servers, storage, service monitoring, and disaster recovery.

Steve joined Safeguard in November 2013 as director of information technology operations.

Prior to joining Safeguard, Steve was vice president of information technology at Revol Wireless, a privately held wireless provider in Ohio and Indiana. He also held management positions with Northcoast PCS and Corecomm Communications, and spent nine years as a Coast Guard officer and pilot.

Steve holds a BBA in management information systems from Kent State University in Ohio and an MBA from Wayne State University in Michigan.

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Assistant Vice president of Application Development

Steve Goberish

Steve Goberish, is the assistant vice president of application development for Safeguard. He is responsible for the maintenance and evolution of Safeguard’s vendor systems ensuring high-availability, security and scalability while advancing the vendor products’ capabilities and enhancing the vendor experience.

Prior to joining Safeguard, Steve was a senior technical architect and development manager at First American Title Insurance, a publicly held title insurance provider based in southern California, in addition to managing and developing applications in multiple sectors from insurance to VOIP.

Steve has a bachelor’s degree from Kent State University in Ohio.