Why Is My Mortgage Company On My Insurance Check?
By Kyle Hyman, Esq.
When you receive an insurance settlement payment, many homeowners are shocked to find that they may not be the only person on the check. If you have a mortgage on your home and had an insurance claim, chances are good that the any claim payments will also have your mortgage company included as a payee.
The Reason
The mortgage company is included on the check because they have an interest in the funds being used to ensure the home is properly repaired.
Because many homeowners are most interested in getting their home put back together after a loss, a check for $50,000 showing up in the mailbox can be more than tempting for some.
As you may have already guessed, this could present problems for the mortgage company should they eventually take possession of the home through a foreclosure proceeding and yet repairs were never made.
The Process
The good news is that most major mortgage companies have entire departments and well set out procedures in place to process insurance claims checks.
Since each company differs with regard to their procedures, you should reach out to your mortgage company even before the claim check arrives so that you know exactly what needs to be done in order to obtain the proceeds.
You will also want to make sure that you are up to date on your mortgage payment as some mortgage companies will reallocate the insurance funds towards overdue mortgage payments.
The Settlement Check
Depending on the amount of the settlement check, some insurance companies will endorse the entire check over to the homeowner without much issue.
For larger and more complex claims, don’t be surprised if your mortgage company holds the money and disperses it in piecemeal fashion as different portions of the work is completed.
It is also common for a mortgage company to request estimates from the insurance carrier, copies of permits, and even an inspection of your residence to make sure the repairs are being made as needed.
At The End of the Day
In most cases, the mortgage company is really just interested in ensuring that the repairs are being done and that the home is being put back into its pre-loss condition.
For that reason, usually the best way to get your money is to try and accommodate them within reason.
However, if you feel like a mortgage company is holding your money improperly or putting undue restrictions or conditions in place, you should contact an experienced attorney who will be able to advise you of your rights both under your insurance policy and with the bank.
Kyle Hyman, Esq.
DISCLAIMER: This website is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Cohen Law Group through this site does not form an attorney/client relationship. This site is legal advertising. Please review the full disclaimer for more information by clicking here.
