When the nation's largest new-home warranty company, Home Owners Warranty Corp. (HOW), was taken over by regulators last fall, the odds of homeowners getting money for covered repairs diminished considerably.
Sally and Dennis Myers were among those left in the lurch. The soil beneath their Temple, Texas, house has moved, causing mortar in the brickwork around their doorway to crack.Plus, Dennis Myers says, the floors aren't level, the stairs sag and a bathroom door won't close.
The builder made some repairs but told Myers he should put in a claim to HOW for other problems. HOW agreed that there was a major structural defect in the 1988 house, but HOW and Myers couldn't settle on what should be done, nor on a price tag for the damage.
Last February Myers sued HOW and the builder, as well as others involved in the construction of his house.
But in October HOW, whose operations are based in Arlington, Va., was placed in receivership by Virginia state officials because, they said, the company's $126-million reserve fund was inadequate to cover future claims from the 1.7 million homes it held under warranty.
(The takeover followed years of alleged foot-dragging by HOW on new-home claims, which triggered congressional hearings in 1991.)
Under the receivership, no one may proceed with lawsuits against HOW.
Warranties in place as of Oct. 7, 1994, remain in effect, and the receiver recently agreed to pay 40 cents on the dollar for "valid" claims.
Warranty holders "need to be patient," says Ken Schrad, spokesman for the Virginia State Corporation Commission, the group that took over HOW. The receivers have set up a toll-free phone number (800-433-7657).
Homeowners with new claims should send them to the Special Deputy Receiver, Office of Receivership Claims, P.O. Box 152087, Irving, TX 75015.