Mortgage company does not give all insurance $ to homeowner

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PostPosted: Tue Apr 17, 2012 6:26 pm   Post subject: Mortgage company does not give all insurance $ to homeowner  

If I do not get all of the money back that the insurance company wrote the mortgage company to cover my claim, what happens to the balance of the money if all repairs are made?

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PostPosted: Thu Apr 19, 2012 5:07 am   Post subject: Mortgage company and insurance  

Usually an insurance adjuster estimates the amount required for repairing the house. A licensed contractor is also asked for the approximate costs. When the insurance provider disburses the check to pay for the damages, the mortgage lender remains the primary receiver. This means that your lender has to endorse the check first and then only you’ll be able to receive the payments for the repairs. The lender retains a large share of the money, and releases funds to the contractor only after he is satisfied that the repair works have been done successfully. As for the remaining funds, the final decision to distribute remains with the mortgage lender only. You can ask him for the endorsement, I suppose.

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PostPosted: Thu Apr 19, 2012 1:18 pm   Post subject:   

If you refer to your mortgage documents it should spell out exactly how they will handle insurance claim payments. In my past experience they will either endorse the check right away at the bank level on smaller claims. If the claims are over their threshold which is often $10,000 they will have you send in the check with the adjusters estimate. After that they will send the money to you in draws as you complete the work. At the point where all the work has been done they will send in an inspector the make sure everything was completed, at this point they will typically release the remaining funds, even if you did not spend it all. Of course it will depend on if you are current with your mortgage as if you are not they will most likely hold the money or apply it to your loan. My experience is with insurance claims in Florida so it could potentially be different if you are in another state.

Good Luck!


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PostPosted: Sat Apr 21, 2012 11:06 pm   Post subject:   

Your mortgage company is NOT entitled to withhold any of the insurance company payment once the repairs to the property are complete. As explained above, they may disburse the money incrementally as the work is being done, to ensure that the work is completed.

But after that, any balance of funds is owed to you, even if you owe past due mortgage payments. It would be considered "conversion" for the lender to keep any portion of your insurance proceeds -- you are the insured, they are an "additional insured" only for the purpose of being able to file a claim in the event you could not.

An example of this would be if you deliberately damaged the property (arson, malicious mischief). While you could not collect on a claim for your own criminal act, the lender could. They have a security interest in the property itself, not the contents. That stuff, they could care less about.


CA-licensed Life & Disability Analyst. CA Insurance Lic #0596197. Also investigating insurance company abuses, and providing litigation support/expert witness services. Send me your questions, and I'll send you my answers.
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PostPosted: Wed Jun 27, 2012 9:50 am   Post subject:   

Normally, you send the check to your mortgage company and they can endorse it and return it to you, or they can take the money and pay the contractor. It is handled both ways depending on the claim, and the amount, and if the work has yet been done.

Exactly what the mortgage company does not want is for you to collect the money and not make the repairs to the home that is the collateral on your loan.

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PostPosted: Fri Jul 27, 2012 6:00 pm   Post subject: Getting funds to do work myself  

Hi my name is Robert i recently came across alot of these problems and im starting this whole process of getting funds to rebuild. My situation is a little diffrent becuase i wanted to do alot of the work myself to save money. I dont think i would be able to hire contractors to do these jobs for the money i recieved from the insurance. My question is can you do this work yourself and have money released or do you have to hire contractors in order to get funds released? Thanks for any information you can provide. By the way i live in MD if that matters.

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PostPosted: Thu Nov 29, 2012 11:04 am   Post subject: Mortage contractors  

Yes Insurance companies play in a different way with people and ultimately they pay less amount which actually they have to play. I was searching mortgage information for contractors and i found this post now.

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PostPosted: Wed Jun 24, 2015 4:27 am   Post subject: extremely frustrated  

Ok...have went through and read the posts above... what i havent seen is my situation!!!... so here goes....current on payments.. i owe $3,893 on a $98,000 home..i put down $75,000 and financed the rest.. we had some bad weather here in Oklahoma.. had to claim on the roof.. ok.. adjuster was called out.. got the insurance claim check..$8700 and some change..had to sign it.. had to get a estimate ....estimate was $8500 to repair the roof.. Mortgage company sends me back only $5000 of it,,says once i get the roof fixed then i will get the rest....????? I OWE $3,800 total... thats its.. .. i own it!!... and they want to be a total douche over $3700???... explain that one to me

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PostPosted: Fri Nov 04, 2016 5:29 am   Post subject: Mortgage lender  

I had ice and water damage to my home in February of 2015. After several months the insurance company mailed me a check for about $14000. Based on the repairs I had to make it wasn't nearly enough. I had to hire a public adjuster to battle with the insurance company and now 21 months after the claim I got a check for about $34000. The check is made out to myself and First Federal Savings Bank of Boston. Now the damage was to six different rooms in the house and some damage to the siding. I've spent considerable amounts of my own money fixing much of the damage trying to put my house back together over the past 21 months. Everything costs more than what the insurance company was willing to give me. Now I finally get a check and am excited about using it to finish some of the work and First Federal Savings Bank of Boston wants me to sign the check over to them. They won't release any money for me to pay the public adjuster I had to hire and they say they will parcel out the money according to the insurance company's estimates for each part of the house I fix. I spent $3500 to fix my bathroom but they will only give me the $2500 the insurance adjuster estimated. It will be years before I can afford to fix everything and thus get all of the insurance check. And the statue of limitations to collect depreciation from the insurance company is up in 3 months. This isn't right. I understand First Federal Savings Bank of Boston needs to protect their interest but all of this money is going into the house and then some.

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Jeremy Scafidi

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