GRAND COUNTY, Colo. (CBS4) – It’s been more than a year since the East Troublesome Fire tore through Grand County and of the 366 homes lost, just over 90 homeowners have permits to rebuild.

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“It was bad enough going through what we did, then to get the process going to get the permits to get you know, our building plans, contractors lined up was a tough process,” said Mike McShane, a homeowner in the Grand Lake area.

McShane and his wife, Amanda O’Mara were among the first few homeowners to get a permit to rebuild but the struggle continued. Like many, they were underinsured.

“…and then we ended up in a spot just because of inflation we were underinsured so that’s where I kind of stepped in and started doing a lot of the work,” said McShane.

When their insurance carrier finally paid their mortgage company, Fifth Third Bank, they thought they would finally have the funds to pay their contractor.

“Where the real nightmare begins is what we learned is our mortgage company withholds our money and they get to pick and choose when they want to release it,” he said.

Natascha O’Flaherty, an attorney in Grand County, has worked with numerous homeowners in the area who are fighting with insurance companies, she says for Amanda and Mike, dealing with the lender needs a similar approach.

“I think the prudent thing I would tell people to do is meet with your lender, have a clear understanding of the terms and have those documented in writing,” she said.

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O’Flaherty said when an insured has a mortgage, like Mike and Amanda, the coverage amounts that are paid on the dwelling, are paid jointly to the insured and to the lender.

In Mike and Amanda’s case, they are paying interest on their loan and the lender is also getting money from the insurance carrier. O’Flaherty doesn’t represent the couple, but says in their case says the bank is essentially double-dipping.

“In Amanda’s situation she had two choices to pay off the mortgage and then get out a new construction loan for the amount in excess of what the insurance was going to pay,” she continued, “The other choice was to get an agreement with more specifics from the lender of how and when those monies would be released.”

According to Amanda and Mike, there was never an agreement about how the money would be released. It’s why O’Flaherty says the couple should consult with an attorney.

“The lack of terms and conditions of how and when this money will be paid out in her situation is beyond frustrating. Especially as the lender in her situation holds significantly more money than the loan amount,” said O’Flaherty.

Amanda and Mike say Fifth Third Bank recently released around $30,000 of more than $100,000 with no agreement about how and why it was releasing funds.

“So they have a policy saying that they’ll only release money when the house is 50% complete or 75% complete, but they’re not taking into
consideration how underinsured we were because of you know the inflation,” said Amanda.

“It doesn’t make any sense at all because for example, we are getting drywall done. You have to upfront all the costs to get that process going. Right? All the materials for drywall are a lot of money and if you don’t have the money, we can’t start the process, but they’re saying we have to have it finished before we have the money,” said Mike. “It’s the lack of common sense and care on their end and we know as we’re going forward, we’re going to have more and more fights because they won’t release everything until we’re 100% done but we can’t build without the money upfront.”

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Amanda barely made it out of the fire alive and never imagined she would be reliving the nightmare through the rebuilding process a year later.

“We need to keep fighting for ourselves, policies need to change with how insurance distributes money, how the bank distributes money and thinking of the future homeowners like I don’t want them to go through what we went through what we’re going through right now with them. So if there’s anything that we could say to kind of help, ease their process, it’s worth it to us to do this,” said Amanda.

Their story of battling through the insurance process and trying to get money from lenders is one of many in the Grand County Community. O’Flaherty knows the stories well.

“There are dozens and dozens of people that were affected by the East Troublesome fire who have not been timely paid by their insurance carrier. It’s particularly heartbreaking when you see clients who have paid premiums for 40 years, 42 years and now a year after the fire, their claim has still not been paid out I find it uncontainable and inexcusable,” she said.

There have been many lessons learned as a result and O’Flaherty says Rep. Judy Amabile is working on legislation that could make the claims process more timely and easier overall.

She says the most important thing is to be prepared because there will be more fires in Colorado and it’s likely many homeowners are underinsured.

“You want to revisit the value of your home and ‘what does it cost to rebuild?’, because right now rebuild costs are probably higher than the market value of your home was at the time of the fire. So have that conversation with your agent, check with local builders.”

“Read your policy, it’s not that exciting, but just see what you have and is that what you want to have and is it adequate.”

Jennifer McRae