Focusing on Participation Agreements
The CFSIC Participation Agreement, once countersigned by the Superintendent, is the document that permits a Type 1 foundation remediation to be scheduled and paid for or for a Type 2 reimbursement process to begin.
It is the most important and final stage in the journey of any CFSIC claimant.
CFSIC issues two types of Participation Agreement…one for a Type 1 claim and one for a Type 2. You can only get either type of Participation Agreement provided to you if your Type 1 or 2 claim is active and you have been placed by your claim adjuster into the Participation Agreement line.
Here are some facts and figures about the Participation Agreement process and what has gone on to date:
– The Superintendent has countersigned 614 Participation Agreements…526 Type 1s and 88 Type 2s.
– With regard to Type 1s, no Severity Class 2 claimants have been issued Participation Agreements as of this date. We expect to begin the process of getting to Class 2 claimants in July 2021 when the next round of funding becomes available.
– As of last Friday, the value of all signed Participation Agreements totaled $83,146,498.
– Of that amount, $53,265,473 represents actual paid construction deposits, progress payments on construction, and reimbursement payments to Type 2 claimants.
– Right now, the Superintendent has stopped issuing Participation Agreements for those in line back to February 26, 2020. When the next round of funding is received, the Superintendent’s staff will begin with those claimants in line with a date/time stamp beginning on February 27, 2020.
– Once a Type 1 Participation Agreement has been issued to a claimant, returned by that claimant to the Superintendent’s office, and has been countersigned by the Superintendent, the homeowner and contractor can schedule the construction process based on their mutual schedules. CFSIC does not get involved in the scheduling of construction.
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.
More About Pending Claim Status…
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
CFSIC’s 2019 Audited Financial
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