To Our Friends in Massachusetts…
We continue to get a number of email and phone inquiries from the victims of the crumbling foundations crisis who live in Massachusetts.
Although the true extent of the crisis in MA has not yet been quantified, significant evidence exists that the crisis is widespread and begins literally right over the border from CT.
So far, CFSIC has had no formal approach from anyone in MA representing state government requesting information about CFSIC’s legal structure, how it is licensed, how MA might come together with CT to utilize the proprietary CFSIC claims management model, including its proprietary electronic application process, or requesting assistance in replicating that model.
CFSIC stands ready to engage if and when the time comes, and someone reaches out to us.
To our friends in Massachusetts, we do want to make it clear that CFSIC cannot currently operate in that state. We can’t take a Massachusetts application. We can’t assist a homeowner. We can’t evaluate a foundation for inclusion in the CFSIC program. The enabling legislation here in CT doesn’t permit CFSIC to do anything in MA or spend any of its budget allotment on any crumbling foundation located in that state…or even respond to a MA resident in any way.
When the Superintendent’s office responds to MA victim inquiries, we do so because it is the right thing to do…but not because we’re authorized to do it.
We do our best at CFSIC to refer MA inquiries to our website or back to MA state government. Anyone who calls us gets a respectful response…but a response that of necessity doesn’t contain much in the way of useful information, because no arrangement exists between CFSIC and the state of MA where the exchange of information can happen within a legal framework.
We note that no funds have been appropriated at the MA state level, even in a modest amount, to test the feasibility of MA joining CT as part of the CFSIC operation. No attempt that we are aware of to test feasibility has happened, and no formal effort exists in that regard that we are aware of.
Captives aren’t formed (or even joined) without a feasibility analysis having happened, where that analysis discusses capital requirements, organizational and legal issues, and which provides for an implementation and administrative budget.
That would be a first step, and until that step is taken…while we are deeply sympathetic to those in MA living with this terrible crisis…CFSIC literally can’t help.
Spotlight on Manchester
Let’s consider Manchester.
Here are some important facts and figures for those interested in the known extent of the crumbling foundations crisis in this town:
– CFSIC has 167 registered claimants in 25 months.
– Of this number, 57 are Pending claimants.
– CFSIC has recorded 151 Type 1 claimants where severity class codings have been independently verified…140 of these are Severity Class 3.
– CFSIC has paid $3,243,472 in foundation remediation and reimbursement claims.
– Currently, CFSIC carries on its books outstanding claim liabilities for known claimants of $9,858,777. (None of the 57 Pendings are accounted for in these carried and booked liabilities.)
– CFSIC has completed 17 foundations in Manchester for a total value of $2,314,459. (This results in an average replacement value for allowable costs of $136,145, which is approximately $19,000 lower per foundation replacement than CFSIC’s current total replacement average across the entire affected area.) In addition, this is almost $39,000 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.
– 57% of the known and registered claimants in Manchester own homes that were built in the years 1983 and 1984.
– Estimated value of all Pendings currently registered with us from Manchester is $8,778,000.
– If CFSIC’s sunset date is not moved to a minimum of 2030, at least 75% of our known 57 Pending claimants will be left behind.
The Importance of Reaching Everyone…
CFSIC believes that Congressman Courtney’s continuing position with regard to HUD’s Community Development Block Grant program is worth revisiting. 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 doesn’t have the means to come up with, standing between a crumbling foundation and a home back on a town’s tax rolls. CFSIC encourages our friends at the Department of Housing to revisit ways in which claimants who have met all of our criteria can access needed CDBG funds to get their homes fixed and their lives put back together again.
Defining What CFSIC’s “Sunset Date” Means
We want to draw a distinction between talk about the extension of our sunset date…and what is actually going to start happening if CFSIC’s current sunset date of June 30, 2022 is not extended legislatively.
Speaking from an operational standpoint, if the sunset date does not get moved, the management and staff of CFSIC will begin the process of preparing for a transition of CFSIC’s operations to some other entity on August 1, 2021.
This is not about sound bites. This is not about social media conjecture. This is about the facts surrounding a required eleven-month transition timeline in order to make certain that CFSIC is disbanded by 5:00 PM on June 30, 2022 and someone else takes up the reins without any reduction in the services needed by the victims of this crisis.
If the sunset date does not get extended, beginning on August 1, 2021 the Superintendent will lay out a transition plan to CFSIC’s Board of Directors for its approval. CFSIC is a huge underwriting operation with thousands of claim documents supporting almost 1,700 claimants…with more coming in every day. It will take eleven months to identify and to train someone other than CFSIC staff to do what we do, to have them “shadow” our day-to-day operations for months in order to effect a smooth transition, and to otherwise make certain that claimants receive the kind of service and attention they have come to expect, once CFSIC has been closed down.
Specifically, the general timeline would be as follows, working backwards:
1) June 30, 2022: At 5:00 PM on that day, CFSIC’s license as an insurance company is surrendered to the CT Insurance Department. The underwriting staff has been terminated. The claims adjustment staff has been terminated. CFSIC’s phones go silent.
2) April 1, 2022: All existing claim files for Active, Inactive, and Pending claimants will be transferred electronically to wherever the Superintendent’s office has been told to transfer those documents. Whoever assumes day-to-day management of claim operations will need time to put processes in place to replicate what CFSIC is doing now. That new entity will engage on a daily basis with current claims management staff…but current claims management staff will no longer have responsibility for dealing with day-to-day claimant matters and will serve only in an advisory capacity.
3) December 1, 2021: The Superintendent has been informed as to the persons or entity CFSIC’s operation must be transferred to.
The Board of CFSIC and the Superintendent will remain in place through September 30, 2022…but solely for one purpose: to manage the audit process to its close. The Superintendent will no longer have responsibility beyond that point. The Board will be disbanded on that day.
In addition to the issue of the extension of CFSIC’s sunset date is the issue of whether CFSIC might be able to receive an accelerated Healthy Homes funds benefit through a bond offering securitized by Healthy Homes funds.
The Superintendent’s office applauds any measure being taken to accelerate the receipt of funds to CFSIC. The Superintendent has been involved directly in some of these discussions and not in others. Because the Superintendent controls CFSIC’s budget and the management of CFSIC’s accounts, it follows that the Superintendent’s office should be involved in any and all discussions related to funding.
To be clear, CFSIC’s position is that it would welcome any extension of the sunset date beyond 2022, and any acceleration of funds (provided that that did not mean an overly burdensome debt service cost to CFSIC).
There has been a great deal of speculation about the sunset date issue. But here are the facts:
1) If CFSIC’s sunset date is not extended past June 30, 2022, the process of unwinding CFSIC’s operations must actually begin on August 1, 2021.
2) If CFSIC’s sunset date gets extended to June 30, 2030, then we take advantage (whether payments are accelerated or not) of $88 million to $96 million of additional funding between June 30, 2022 and June 30, 2030 to help homeowners, which means more than 600 more homes remediated. If the sunset date doesn’t get moved, our estimates are that we leave more than 1,000 current claimants behind, the vast majority of which are coded Severity Class 3.
CFSIC is not a political animal. The Superintendent has kept CFSIC out of politics, and in the business of remediating foundations and serving the victims of this crisis. That’s the proper job for CFSIC as a private company and as a federal tax-exempt.
But CFSIC believes it is important to move beyond sound bites to facts. The facts are clear. It took more than a year to get CFSIC off the ground to begin with, primarily because of funding delays and bureaucratic issues. It’s not unreasonable to assume that it would take eleven months to transition its huge operations somewhere else (destination unknown) if its sunset date is not moved and additional funding secured.
CFSIC welcomes all reasonable inquiries for information, provided we are given an opportunity to tell the whole story at all times. CFSIC’s story is the story of the crumbling foundations crisis. The crumbling foundations crisis deserves more than sound bites.
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