Article Courtesy of The Miami
Herald
By JULIA CARDENUTO
Published March 16, 2010
Carla Gemmati, 45, a resident at the Lake
Pointe Condominium in Oakland Park, saw her mortgage almost double from
$975 to $1,700 in December.
The additional cost was to cover a
windstorm insurance that her condominium's association had just
eliminated, forcing her mortgage lender, Bank of America, to purchase a
policy of more than $4,500 on her behalf and charge the cost against her
monthly mortgage payment.
"I haven't been able to make the whole
payment,'' Gemmati said. "If I can't make the payments, I foresee
that [a foreclosure] can happen.''
Windstorm insurance coverage is mandated
under Chapter 718 of Florida Statutes, or the Condominium Act. According
to the law, insurers issuing residential property insurance policies, in
this case the condominium's association, are required to include hurricane
windstorm coverage.
In February, Gemmati filed an unprecedented
lawsuit against the condominium association and members of its board in
order to regain the windstorm coverage and get reimbursed for the price
hike in her mortgage.
The lawsuit states that, "the
defendants intentionally refused to obtain and maintain adequate
insurance, specifically windstorm coverage.''
Robert Kaye, a managing member of Kaye
& Bender in Pompano Beach, is representing Gemmati, who is a
collection specialist in the same firm.
"Florida Statute and the declaration
of the condominium require the association to provide a certain level of
insurance for the buildings and that includes the windstorm insurance,''
Kaye said.
Gemmati has been living at the Lake Pointe
Condominium for five years. Up until last September, the windstorm
coverage was provided by the association and included in the $375 fee
homeowners paid each month to the association.
"All the insurances are supposed to be
included,'' Gemmati said.
Members of the board and the association of
Lake Pointe Condominium and the lawyer representing them did not want to
comment after several attempts.
As of March 10, Kaye said the association
had not yet contacted him regarding the lawsuit.
Kaye said there was an extension on the
previously set deadline for the board and association to respond to the
lawsuit with an action path. The new deadline is Monday, March 15.
Gemmati said she was not notified of the
windstorm insurance cancellation but received a different kind of letter
last November. Her mortgage lender stated Gemmati needed to present proof
of adequate windstorm insurance or it would have to purchase insurance on
her behalf and add the cost to her mortgage payments.
Kaye said after Gemmati received the first
letter from her mortgage lender, he wrote to the association.
"A property manager contacted me
saying they were not going to obtain the insurance,'' Kaye said. "We
wrote again saying they needed to reimburse [Gemmati] for the cost. After
that they stopped responding and we filed the lawsuit to reimburse the
cost and provide coverage.''
Property manager Bob Mandell declined to
comment.
Mortgage lenders usually hold the right, as
stated in lender-borrower contracts, to add a lender-placed insurance if
the borrower fails to maintain evidence of existing and acceptable
insurance.
Bank of America, Gemmati's lender, notified
her on Dec. 17 that it had purchased windstorm insurance at BAC Home Loans
Servicing, LP, a subsidiary of Bank of America, at Gemmati's expense.
The letter stated that Gemmati was "obligated
by [her] loan agreement to reimburse BAC Home Loans for the premium
paid.''
The premium cost $4,515.70, which was
transferred to Gemmati's monthly mortgage payments, skyrocketing it to
$1,700.
"I don't like that I can't make my
payments. I get nervous,'' Gemmati said. "I just hope to get this all
straighten out soon.''
Kaye said that the suit was also filed as a
derivative action on behalf of all members of the association, which is
made possible by Chapter 617 of the Florida Not-For-Profit Corporation
Statute.
No other homeowners have come forward to
join Gemmati in the lawsuit.
Kaye said that even if the association
decides to repurchase the windstorm insurance, legal action will still be
sought in order to reimburse Gemmati and possibly other homeowners.
"If they get the policy in place soon,
it's possible that there will be no large amount of damages,'' Kaye said.
"They might not have much expense for those premiums [charged to
homeowners' mortgages.]''
Attorney Cheryl Levine, who is representing
the association and board members, did not respond to several attempts to
contact her.
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