Promoting Concrete Science…
CFSIC’s Board of Directors is committed to the facts about the science of concrete failure. The way forward to more funding and more remediation has always been knowledge about the depth and extent of the crisis.
We’re pleased to publish Kevin Miller’s second in a series of monthly articles…this edition focusing on the science of why concrete foundations fail. There’s also a good glossary of terms that will assist everyone with understanding more about concrete foundation failure.
Click here to read this article (PDF). CFSIC is committed to spreading the word about why concrete foundations fail.
CFSIC’s board is encouraged by the contents of CT House Bill 6646… which contains life-extending and life-enhancing benefits for CFSIC, enabling us to continue the work we have been doing to assist the victims of this crisis.
HB 6646, among other things, eliminates CFSIC’s current sunset date, enabling us to continue our work and help more victims of the crisis. It also potentially extends the Healthy Homes surcharge from its own current sunset date of 2030 to 2041. It authorizes the Connecticut Housing Finance Authority to work with us to determine creative ways to secure a pre-funding of Healthy Homes surcharge funds, enabling CFSIC to keep construction momentum going in the current fiscal year by getting more cash.
We earnestly hope that CHFA will work with us, as a private corporation, to arrive at a solution to help us support the victims of the crisis. A successful outcome between CFSIC and CHFA would further enhance CFSIC’s reputation, globally, as an example of a true private/public partnership.
So what is this “momentum thing”?
It’s really simple, and it’s all about the math. We hope to receive approximately $31 million this summer in a combination of Healthy Homes surcharge funds and our very last installment of CT Bond Commission funding. When those funds hit CFSIC’s account, the Superintendent’s office will immediately open up the Participation Agreement line to process PAs for claimants who have been waiting in that line for help since January of 2020 (yes, you read that right).
With $31M in CFSIC’s account, we will process PAs as quickly as we can; but it’s important to note that by no later than Thanksgiving, that $31M will be fully committed to construction, and we will have to close the PA line again until the summer of 2022.
It’s this “stop and start and stop again” process that defeats our work.
Contractors can’t schedule remediation enough in advance. They can’t hire workers in advance and commit to payroll. We can’t give families an idea of which month (or even which year) they should start looking for a place to live for 14 weeks. The stop and start and stop again process defeats our purpose.
Imagine if CFSIC had even another $20M coming in this summer on top of the $31M we are scheduled to get. Imagine if it was more like $30M or $50M or $80M. Imagine, if you are a homeowner whose foundation continues to deteriorate, what you could do with better information about how to plan your life in the face of a steadily deteriorating foundation.
For those of you who read our website and understand what a Pending claimant is…or if you are actually a severity coded Class 3 Pending claimant…let us give you an example.
With another $30M in funding this summer (beyond what we are getting), we could actually begin to remediate Pending claimants six years in advance of when we anticipated.
The benefits of our program ripple through the economy of the Northeast Corner. We are steadily improving the debilitated property tax base. We are increasing home values. We are keeping construction workers employed who both work and live in the Northeast Corner. We are greatly improving the real estate market. We are giving people hope about the future.
It makes no sense to “stop and start and stop again.”
We look forward to discussions with CHFA on the important issue of the securitization of a large installment of cash through the use of future Healthy Homes payments. We are also exploring private means of raising these funds, as well we should, as very little connected with the crumbling foundations crisis is ever anywhere close to a sure bet.
Well, perhaps there is one thing that is a sure bet: without more funding than the $31M we are budgeting…we will shut down the PA line again in November, leaving families urgently in need of help, with no help…all of them waiting for another year or more to put their lives back together.
Victims Need Access to CDBG Funds
CFSIC believes that Congressman Courtney’s continuing position with regard to HUD’s Community Development Block Grant program is the right position. The state of Connecticut has access to CDBG funds. It’s true that these funds are subject to income limitations… but CFSIC’s board believes that any available federal funds that can be used to help homeowners, should be used to help homeowners. It just makes sense. Over the last two years a number of homeowners have withdrawn their CFSIC applications because they cannot raise the money needed to supplement what CFSIC will pay for. In a number of cases, we’re talking about less than $10,000, which the homeowner in question simply doesn’t have. It makes no sense that this is happening. CFSIC encourages our friends at the Department of Housing to revisit ways in which claimants, who have met all of our underwriting criteria, can access needed CDBG funds to get their homes fixed and their lives put back together again.
Spotlight on Ashford
Let’s consider Ashford.
Here are some important facts and figures for those interested in the known extent of the crumbling foundations crisis in this town:
– CFSIC has 33 registered claimants in 27 months.
– Of this number, 7 are Pending claimants.
– CFSIC has recorded 31 Type 1 claimants where severity class codings have been independently verified…21 of these are Severity Class 3.
– CFSIC has paid $1,486,715 in foundation remediation and reimbursement claims.
– Currently, CFSIC carries on its books outstanding claim liabilities for known claimants of $1,199,970. (None of the 7 Pendings are accounted for in these carried and booked liabilities.)
– CFSIC has completed 10 foundations in Ashford for a total value of $1,469,215. (This results in an average replacement value for allowable costs of $146,921, which is approximately $7,000 lower per foundation replacement than CFSIC’s current total replacement average across the entire affected area.) In addition, this is approximately $29,000 below CFSIC’s cap of $175,000…proving again that CFSIC’s cap not only works, but applies in the broadest way to the victims in the entire affected area.
– Estimated value of all Pendings currently registered with us from Ashford is $1,079,652.
– If CFSIC’s sunset date is not moved to a minimum of 2030, at least 80% of our known 7 Pending claimants will be left behind.
Read March 22 Testimony by the Superintendent
Today, March 22, the Superintendent of CFSIC is scheduled to testify before the House Planning and Development Committee. You can read his full testimony here (PDF).
In summary, here’s what the Superintendent is advocating for:
– that CFSIC’s current sunset date of June 30, 2022 be eliminated entirely;
– that the Healthy Homes surcharge (now scheduled to sunset on June 30, 2030) be extended to 2041;
– that Healthy Homes surcharge funds be provided to CFSIC on an accelerated basis through the issuance of a bond, where that bond is secured by future Healthy Homes surcharge payments.
Why is the Superintendent advocating for these three points?
If CFSIC’s June 30, 2022 sunset date is not moved or eliminated, the Superintendent has directed that by September 1, 2021, CFSIC begin to unwind its operations and begin the gradual transfer of its responsibilities somewhere else. If we do this, we leave many claimants behind and we leave them to an uncertain future.
By extending the Healthy Homes surcharge lifespan to 2041, we enable many more families to be helped than we can help now…and if we can get funds advanced to us through a bond (where that bond is secured by Healthy Homes payments) then we can keep the momentum of construction going at a faster pace. A faster pace means more families helped and more property tax relief to the affected towns in the region.
CFSIC Promotes Concrete Science
This week we begin a series of articles authored by Kevin Miller, an acknowledged specialist in the science of concrete failure, focusing on the crumbling foundations crisis and providing facts about why the crisis has occurred and what we can all do about it.
Kevin’s articles will be informative and easy to read, and will shine a bright light on the crumbling foundations natural disaster.
Sorting Through Active Claimants
CFSIC has begun the process of alerting Active Severity Class 3 claimants, some of whom have been Active claimants since January 2019, that they will be removed from eligibility over the next few months if they do not take the steps necessary to secure a minimum of two construction proposals as requested by CFSIC, have those bids approved by CFSIC’s claims adjustment staff, and otherwise demonstrate that they are still interested in pursuing a claim for foundation remediation by placing themselves in line for a Participation Agreement.
Claimants who have applied, put themselves in a position to potentially receive funds, and then dropped out of sight and been non-responsive, will eventually be removed in order to make way for families desperate for assistance.
To be clear…we will only remove a claimant who is an Active claimant if, after repeated attempts to reach them by email and mail, they remain unresponsive. We have other claimants waiting for assistance, and in some cases those claimants are in a desperate situation because we are holding claim reserve liabilities for Active claimants who are not demonstrating an interest in proceeding. Over the next few months the Superintendent will be removing claimants who are non-responsive after repeated attempts to reach out to them for an answer. Once this process has concluded, we will begin the process of removing Inactive claimants, who, after repeated requests to make their claim Active (in most cases by simply taking an extra step or two) have remained Inactive…in some cases, for almost two years.
Now Also Accepting Type 2 Applications for Pending Claimants
Effective December 14, 2020, you will be able to go on this site and file an application if wish to be a Type 2 (foundation reimbursement) claimant, with the understanding that you will be registering your claim as a Pending claimant.
This is a change from the original plan…but the Superintendent has considered a number of emails and phone calls that he has received requesting that we re-open for Type 2 as well as Type 1 claimants, and CFSIC has agreed to do this.
We want to emphasize again that CFSIC’s board has authorized a total of only 100 paid Type 2 claims during its lifespan…it is unlikely that this number will be increased in future.
To read a Q&A that will help you understand the Pending claimant process, see below.
Question: I have a verified Severity Class coded 3 foundation, and I just found that out. If I apply, do I get in line right away?
Answer: No. All you can become, once we re-open our doors for applications on December 7, 2020, is a “Pending Claimant” with a Severity Class 3 foundation. You will be joining, when you apply, a list of existing Pending claimants, many of whom are also Severity Class 3. At this point, applying as a Pending claimant does not put you in line for remediation…it only allows you to register the existence of your impaired foundation with us.
Question: Are you saying that, even if I have a completed application and a verified Severity Class code 3 foundation, you will be unable to make my claim “Active” or even “Inactive” on or after December 7, 2020?
Answer: That’s currently correct. You will not be able to become an Active or Inactive claimant until all current Active and Inactive claimants now in line have their claims fully adjusted and their funds committed by CFSIC. You will be a Pending claimant. You may remain a Pending claimant for a very long time. You may never receive any funding, given our current projection of revenue between now and June 30, 2030.
Question: But don’t you know for certain that you’ll be getting one more payment of $20 million sometime after July 1 of 2021 and around $11.6 million to $12.0 million in June of 2021 and every year thereafter through June 30, 2030 (if they change the current sunset date of June 30, 2022)?
Answer: We have every expectation of getting our last $20 million of Bond Commission funding in the summer of ’21, and we believe that we’ll get $11.6M to $12.0M at around the same time for the second installment of Healthy Homes funding. We should get eight more installments of Healthy Homes funds after that, annually, for similar amounts. But we want to be clear…all that funding is currently allotted to Active, and Inactive claimants (who will become Active), with Severity Class 3 and 2 foundations, most probably through the end of 2026 or the beginning of 2027. If at that time we get through the current list of those in line for a Participation Agreement, as well as others who can move into that line, in 2027 we are only going to start to get to between 150 and 200 Pending claimants who were already been in line before December 7, 2020.
Question: So if I apply as a Pending claimant now, do I still get a claim number?
Answer: You do, and that claim number means you are registered in our system.
Question: So that means a claim adjuster will reach out to me?
Answer: No. You will have no contact with a claim adjuster. You won’t have that contact until and unless your claim moves into Inactive or Active status. CFSIC’s adjusters are very busy managing the day-to-day process of existing Active and Inactive claimants as well as all the construction associated with those claims.
Question: Can I file a claim as a Pending claimant and I just file the application, even if I don’t have all my points of evidence?
Answer: You can…and you will still get a claim number…but remember: you will never be able to move beyond that point to Active status, if funds become available, until your application is complete in each and every regard.
Question: So if the sunset date gets moved, you get enough money in June of 2021, and you make my Pending claim an Active claim in, say, 2028, and I am a Severity Class 3, that means I jump ahead of all the existing Active Severity Class 2s that have been in line since January 10, 2019…right?
Answer: No. As of January 13, 2020, we are not going to permit any Severity Class 3 claim originally filed as a Pending claim to jump ahead of an Active Severity Class code 2 already registered with us as an Active claim prior to January 13, 2020. We have many Active Severity Class coded 2 claimants who have been in line since January of 2019, and we have determined that it is fair to issue Participation Agreements first for all existing Active 3s and 2s in our system before any Pending claimant can get in line for a Participation Agreement. This is only fair, given how long people have waited.
Question: But I thought Severity Class coded 3 claimants would always be ahead of everyone else. What has changed?
Answer: CFSIC’s Underwriting and Claims Management Guidelines changed effective January 13, 2020, and that change was published on this site, to require that CFSIC issue Participation Agreements to valid, Active Severity Class 3 and 2 claimants who have been in line since the inception of our program before we move any Pending claimants into Active or even Inactive status…regardless of funding amounts to come.
Question: This sounds very discouraging. I guess I’m wondering why I would bother to register my claim with CFSIC given this outlook for the future.
Answer: The choice to apply, of course, is yours. But there are a few reasons why you might want to do this. First, to the extent more funds are made available legislatively in future, we may be able to get to you and get to you sooner than anticipated. Also, you should be aware that there has been some discussion with the Superintendent’s office and officials of state government about the possibility of accelerating part or all of our anticipated Healthy Homes funding. We have no idea where these discussion are going, as they are in the most preliminary phase. Also, if you are a valid Pending claimant who has registered your claim with us, and you decide later to sell your home, as a Pending claimant validly in our system you can transfer your claim to the person buying your home. This may have some value to you. Lastly, we encourage homeowners to think of the greater good…the more claimants in our system who hold Pending status, the greater likelihood, we think, of making a valid case for increased funding at the state and/or federal level.
Question: I plan to file on December 14 as a Pending reimbursement claimant (Type 2). Do I have to wait for assistance until you start addressing all Pending claimants, or can I get in line for help faster?
Answer: The answer is you will have to wait until we start addressing all Pending claimants as a group.
Is Your Claim Still Inactive?
We’re pleased to report that fewer and fewer CFSIC claimants are categorized as Inactive.
Right now, we have a total of 13 Inactive claimants (not counting Pending claimants who cannot be made Active, or even Inactive, for the foreseeable future).
Seven of those Severity Class 3 claimants are Inactive primarily due to incomplete applications; three claimants are awaiting approvals/declinations of their commercial insurance claims; and three are still in litigation.
Among Severity Class 2 claimants, none are in litigation; two are awaiting approvals/declinations of their commercial insurance claims; and one is Inactive because of an administrative issue.
It’s important to point out that these numbers are far fewer than we saw a year ago. It means that claimants are working hard to make their files active, which is the only way, once more funding arrives, for them to get in line for a Participation Agreement.
CFSIC’s 2020 Annual Audit
CFSIC believes that reasonable transparency about all important aspects of our operations is important. This is in keeping not only with our stated mission of service, but also with our federal tax-exempt status as a 501(c)(3). You can find CFSIC’s audited financial report for the period ended June 30, 2020 here. CFSIC was audited by an independent auditor chosen by CFSIC’s board of directors, and where that auditor reports directly to CFSIC’s board with its findings and conclusions. This auditor did in fact report to CFSIC’s board at the recent Annual Meeting of CFSIC. The audit is a qualified opinion. It is qualified because CFSIC books and carries recorded and identified claim liabilities well in excess of its current assets. This is a practice permitted by the Connecticut Insurance Department. With the exception of the qualified opinion for the reason noted above, the auditor’s opinion was clean in all other respects. No internal control deficiencies were noted. 120 randomly selected claims and disbursements were tested for adherence to written policies and procedures. Disbursements were checked and verified.
Transferring Your Claim
All CFSIC claimants (not just active claimants) will be able to transfer their existing inactive or Pending claims to a buyer of their home effective July 13, 2020, retroactive to June 1, 2020. Today, we are publishing on this site the following:
– red-marked changes to CFSIC’s Underwriting and Claims Management Guidelines;
– a new subsection, subsection 20, in the “For Homeowners” section of this site, which will detail how the process will work, inclusive of Q&A;
– a templated Claim Transfer Agreement governing the transfer of a claim in the “For Homeowners” section;
– a new subsection, subsection 11, in the “For Contractors” section of this site, providing claim transfer information for contractors.
What follows is an expanded (expanded from last week) Q&A about this important change.
Question: I’m a Type 1, severity Class 2, inactive claimant. If I sell my home and transfer my claim to the buyer, does that change the status of my claim?
Answer: No. The buyer gets the exact status you had at the moment of transfer.
Question: I’m in line for a Participation Agreement and have been in line for a while. I’ve been told that I may be in the next round of funding at some point after July 1, 2020, but I still plan to sell my house and give up my claim. Does my exact place in line for a Participation Agreement get transferred to the buyer?
Answer: Yes, if the buyer agrees to all terms and conditions of the Claim Transfer Agreement.
Question: Where can I find a sample of the Claim Transfer Agreement on this site?
Question: I’m a Pending claimant, and I’m aware that, given current anticipated projected funding, I may never get my claim paid unless CFSIC gets more money. If I transfer my claim because I sell my home, will the buyer be taking the same risk I am?
Answer: Absolutely. We may never have enough money to address Pending claimants.
Question: Can I transfer my claim without selling my home?
Question: Does this apply to condos? Does it apply to PUDs?
Answer: No for condos. (Remember that condo unit owners are technically not our claimants… associations are our claimants, because it is the association that owns the foundation.) It applies to PUDs.
Question: I’m a Type 2 claimant. Does it apply to my claim?
Question: Once I transfer my Type 1 claim to the buyer, can he or she re-sell the home and transfer the claim again?
Answer: No. The transfer of a claim can occur only once…from one Original Claimant to one Transfer Claimant. It can never be transferred again by the Transfer Claimant.
Question: Will I be able to sell my home first and then transfer the claim at some point after that?
Answer: No. The Claim Transfer Agreement date can only be the same date as the date of the sale of the home or a date prior to the sale. It it’s prior to the date of sale, and for some reason the sale does not go through…then the transfer is voided as if it had never occurred.
Question: OK, but I sold my house in the middle of June…how will the retroactive June 1 date affect me?
Answer: As stated above, on and after July 13, 2020, the date of the Claim Transfer Agreement must be the date of the sale of the home or a date prior to the sale. It cannot, however, be a date prior to June 1, 2020. In your example, you would still qualify.
Question: So are you saying that if I sold my home on May 15, 2020, I’m disqualified?
Answer: Yes, that’s what we’re saying…besides, at the date of sale you ceased to be a CFSIC claimant anyway, and the correct thing to do would have been to notify ESIS of your status so that someone else could have access to your funds. We are grandfathering this process back to June 1 as an accommodation only.
Question: Are you still going to stop the Pending application process on June 30 as previously announced?
Answer: Yes. We have already done so.
Question: I’m a Type 1, severity Class 3 active claimant. So if I transfer my claim to the buyer of my home, what am I really doing?
Answer: Looks like you don’t have a Participation Agreement yet, based on the question. So, what you’re doing is transferring almost every right, obligation, and duty you had for your active claim to the buyer of your home, who then agrees to take over those rights, duties, and obligations.
Question: But I’ve got a signed contract and am in line for a Participation Agreement. What happens if the buyer and the contractor can’t agree on the terms of the original contract or, alternatively, the contractor simply backs out of the arrangement?
Answer: The buyer can seek the required two proposals for construction services from CRCOG-approved contractors to substitute for the original contractor, one of which will eventually substitute for the original contract. CFSIC will keep an active claim “active” for a period of 180 days from the date of the Claim Transfer Agreement in order to allow time for this to happen. If it isn’t accomplished by then, the claim is removed from our system, it is no longer active, and the buyer is no longer in line…and must therefore start the process all over again as if the claim had never transferred. If we are not accepting applications at the time that happens, then the buyer may have to wait for years to reapply, or may never get an opportunity.
Question: Who is responsible for contacting ESIS ProClaim to tell them about the sale of a home?
Answer: Only the original homeowner (Original Claimant). ESIS will not accept communications of any kind from real estate agents or from Transfer Claimants (home buyers) regarding a claim transfer.
Question: Okay…what happens then?
Answer: When you provide ESIS ProClaim with your claim number by phone or email and indicate that you want to transfer your claim to the buyer of your home, they will provide you with a Claim Transfer Data Form to complete. You will send it back to them completed. The Superintendent’s office will then contact you and send you a Claim Transfer Agreement, which will require your signature and that of the buyer, as well as separate witnesses. You will return the fully-executed Claim Transfer Agreement back to the Superintendent’s office. Once this agreement is fully executed and received in the Superintendent’s office, the transfer of the claim can occur, and the permanent records of the claim are changed with regard to who the claimant is.
Question: I’ve already signed a proposal with a contractor. Who is responsible for telling the contractor that I’m selling my home?
Answer: You are. It is not ESIS ProClaim’s responsibility or CFSIC’s responsibility to do this. It also cannot be the real estate agent or the homebuyer. If you want to transfer your claim, you have to do this yourself.
Question: What will CFSIC accept as evidence that the Original Claimant has transferred the home to the Transfer Claimant?
Answer: A copy of the recorded deed.
Question: But I have a CHFA loan agreement that I’ve just entered into. What happens to that?
Answer: You have to address that with CHFA.
Question: My contractor started work on my foundation last week. Can I still transfer my claim?
Answer: No. Once work starts on your foundation, you have to see it through, or you terminate your construction contract. We cannot permit a claim to transfer if even the most preliminary part of the remediation process has begun.
The CHFA Credit Enhancements Program
You should go here to learn more about the CHFA credit enhancements program as it is now constituted. Please note that it currently does not apply to condominiums. CFSIC did not create and is not administering the loan program, and the ESIS claim team cannot advise you in any way about the terms and conditions of any aspect of the program. The link noted in this section will take you to an outline of the program, as well as to a section marked “Frequently Asked Questions.” We also recommend contacting the Homeowner Advocate using the contact information on the Department of Housing website for more assistance.
CFSIC’s 2020 Annual Report
If you have any questions about the operation of the program, ESIS is your best source of information on your claim, and their phone number and email are shown below.
As you work through the information and application process (understanding that we are in suspension for the taking of new applications), here’s how you can get help:
– Call ESIS (the claim adjuster) at: 844-763-1207
– Email ESIS at: firstname.lastname@example.org
– Email CFSIC at: email@example.com