Dealing with Contractors Post-Disaster
(1) Appliances If one repair person tells you that an expensive or major appliance should be replaced, ask for the opinion and replacement cost in writing. Ask to see the contractor’s state and/or local business license. Talk to your insurance adjuster about the cost, and consider getting a second opinion. Make sure your contract lists materials to be used and a completion date. As always, don’t make the final payment until the work is completed and you are satisfied with the job.
(2) Debris Removal Scams If you are dealing with a company or person who promises to remove debris from your property, ask them to list the services they will provide in writing. Don’t make the final payment until you have inspected the job and are happy with it. Check around for prices to make sure you are not overcharged.
(3) Fake Disaster Officials Always ask for identification from any officials who stop at your home or your temporary shelter. Some scam artists claim to be government officials who could help you qualify for disaster relief payments for a “processing” fee. Others masquerade as safety inspectors or utility repair men who say immediate work is required. Still others say they can get you FEMA funds for a fee. FEMA does not charge application fees. In fact, no government agency charges application fees. Verify the credentials of anyone who is offering you low-interest government loans. Confirm that they are affiliated with such agencies by calling the agencies if necessary.
(4) Leftover Materials Occasionally, workers offer to use “leftover” materials to repair your home. Very often, these are not left over from a previous job, but rather poor quality materials. Some states report that common household paint has even been used in fraudulent waterproofing scams. What can you do?
- Get all proposals and contracts in writing.
- Get a second opinion.
- Check the identification of the workers.
- Inspect the work before it is covered – or ask independent and qualified people to check the work for you before it is covered and you pay for it.
(5) Home Repair Scams Consider any offer that is made on a “now or never” basis to be fraudulent. Ask to sleep on any offer and get a phone number to call back.
(6) Rental Listing Scams After a natural disaster, so many people are in need of someplace to live. In a rental listing scam, someone promises to find you housing, but asks you to pay for the promise in advance. Usually state law requires a prepaid rental listing service to give you a written contract. Read it carefully. Meanwhile, know that con artists may try to charge you a fee for the promise of housing that doesn’t exist.
(7) Utility Related Scams Sometimes, fraudsters lie about the quality of the water supply to get you to buy overpriced or useless water treatment devices. Or door to door con artists portray themselves as utility workers checking out safety issues. They’re really casing your place. Ask for identification before you let anyone in, and make sure you can believe it by checking out the company.
(8) Charity Scams Many charitable organizations are stepping up to help those in need. At the same time, there will be people who use this disaster to steal from you rather than raise funds to help others. Here are some tips for making sure your charitable donation goes to help your neighbors:
- Don’t judge a charity by its name. False charities may use names that closely resemble legitimate charities.
- Don’t let callers play on your sympathy by identifying their organization with a natural disaster. This can be a tactic to get your money.
- Don’t be pressured. Give only when you are comfortable with the charity.
- Don’t commit over the phone unless you have fully checked out the organization.
- Avoid cash donations and make checks payable to the organization, not to an individual.
- Be careful about letting solicitors into your home.
(9) Contractor Scams Be on the alert for “storm chasers“ – companies that follow severe weather and try to contract with homeowners who have suffered storm or tornado damage to provide roofing and other repair services. Company representatives will typically go door to door in storm-damaged areas posing as recovery experts or contractors specializing in home repairs.
These storm chasers will ask homeowners to sign a contract allowing their company to negotiate with the homeowner’s insurance company. The companies generally use high-pressure sales tactics; ask for cash up front; may have out-of-state drivers licenses or plates; be unable to produce local references; and have no proof of workers’ compensation insurance. Often, they perform shoddy work, then leave the area, leaving the homeowner with little or no recourse.
Storm chasers strike at a time when people are at their most vulnerable, trying to capitalize on the misfortunes of storm survivors.
(10) Identity Theft If you are recovering from a natural disaster, you will need to share your personal information to get relief benefits from government agencies or other organizations, or replacement identification documents. Be cautious. Identity thieves may be posing as government officials or representatives for government agencies. Ask for identification, and when possible, initiate contact yourself using information posted on official websites or in official information dissemination areas.
Resources if you think you have been the victim of a scam
- Call your Local District Attorney Consumer Protection Department
- Call Colorado Attorney General Consumer Protection complaint line: 1800-222-444 or file an online report.
- File complaint with the Better Business Bureau in your area.
- Call the FEMA Office of the Inspector General’s waste, fraud and abuse hotline at 1-800-323-8603
- Contact an attorney
Hiring a Contractor
(1) Get recommendations from friends, relatives, neighbors, co-workers, insurance agents, or claims adjusters.
(2) Deal only with licensed and insured contractors. Check with the local Better Business Bureau and Home Builders Association to see if complaints have been lodged against any contractor you’re considering.
(3) Be skeptical of contractors who encourage you to spend a lot of money on temporary repairs.
(4) Get a written estimate that includes any oral promises the contractor made. Remember to ask if there’s a charge for an estimate before allowing anyone into your home.
(5) Take your time about signing a contract. Ask for explanations for price variations, and don’t automatically choose the lowest bidder. Resist dealing with any contractor who asks you to pay for the entire job up-front or with any contractor who offers to do the job for the full amount of your insurance payout and refuses to give you an itemized bid or estimate. A deposit of one-third of the total price is standard. Pay only by check or credit card and pay the final amount only after the work is completed to your satisfaction. Don’t pay cash.
(6) Check to see whether the company is local. Does it have a track record with references in the area? Can you see previous work? Take a look at the company vehicle: Does it have the company name, address, and phone on it?
(7) Get at least two bids in writing.
(8) Look at the contractor’s business license, and keep the number.
(9) If someone offers you a “special deal” in exchange for your credit card number, forget about it. And if someone promises you a loan in exchange for a fee in advance, say no. Deal with established lenders only.
(10) Ask a knowledgeable friend, relative or attorney to review a home repair contract before you sign. Get a copy of the final, signed contract before the job begins.
Paying for Repair Work
(1) Pay in installments as the work is completed or in one large payment once the work is done and has been inspected. Before you pay, insist that the contractor give you a sworn statement that all materials have been paid for and all subcontractors have been paid. This protects you from liens that may be placed on your property if all suppliers and subcontractors
(2) Never sign your insurance check over to a contractor. Instead, arrange with your bank for a Certificate of Completion. The bank will pay the contractor for each stage of the job only after you have given your okay.
(3) The U.S. Federal Emergency Management Agency (FEMA) operates a Disaster Housing Program to help homeowners who have been forced out of their homes by disasters. This includes Disaster Home Repair Assistance, which provides grants to homeowners for minor but necessary disaster-related repairs. Call the FEMA Disaster Helpline at 1-800-621-FEMA.
(4) The U.S. Small Business Administration makes low interest loans of up to $200,000 to homeowners to repair or replace damaged or destroyed real estate.
(5) If you get a loan to pay for the work, be cautious about using your home as security: If you don’t repay the loan as agreed, you could lose your home. Consider asking an attorney to review the loan documents.
What to do if you Suspect a Scam
(1) If you used a credit card to pay for a product or service in dispute, you may be able to recover your money. Write the credit card company a letter with the details of the matter; you must do this within 60 days after you get the disputed bill.
(2) If you suspect fraud, waste, or abuse involving FEMA disaster assistance programs, report it to Dept. of Homeland Security’s Inspector General’s Office at 1-800-323-8603.
What is “Home Equity Fraud”?
Home equity is the market value of the home minus the mortgage and other liens on the home. For example, if a home’s market value is $100,000 and the mortgage and all liens are $80,000, the equity is $20,000.
Home equity fraud is the taking of a homeowner’s equity by fraudulent means. Victims of home are most often elderly persons and person with limited English speaking skills.
Home Ownership Issues
If your home is damaged and you can’t live there, you still have a mortgage. Contact your lender immediately. Many institutions will allow a grace period during which they may suspend your obligation to make mortgage payments.
Mortgage help from FEMA may be available if you face foreclosure proceedings.
FEMA operates a Disaster Housing Program to help homeowners who have been forced out of their homes by disasters. This includes Disaster Home Repair Assistance, which provides grants to homeowners for minor but necessary disaster-related repairs. Call the FEMA Disaster Helpline at 1-800-621-FEMA.
You may be eligible for loans from the Small Business Administration (SBA) to make necessary repairs. The SBA makes low interest loans of up to $200,000 to homeowners to repair or replace damaged or destroyed real estate.
If you have a mortgage insured by the FHA (HUD) or VA, you may have additional protections, like forbearance on the mortgage payments or a period of suspended payments. The FHA has extended its foreclosure moratorium and also offers extended payment plans on FHA mortgages. Call 1-888-297-8685 for further information.
Colorado Foreclosure Hotline
Colorado has housing counselors ready to help you pick up the pieces after a disaster. The free counseling agencies are working in partnership with the Colorado Attorney General’s office and the Colorado Foreclosure Hotline. They can provide you with:
- Special flood-related mortgage relief offerings by mortgage servicers
- Connections to housing-related community assistance programs
- Tips to avoid mortgage-related scams
- Foreclosure prevention assistance
- Reviews for Colorado-specific foreclosure prevention loans
Please call the Colorado Foreclosure Hotline’s toll-free number, 1.877.601.HOPE to learn about additional resources available to you.