Insurance Claims: Nightmare’s await Homeowners

Insurance Claims: Nightmare’s await Homeowners
Damage from April 16th Tornado in Raleigh

Your home has been damaged by a tornado, flood, a tree fell on it in the recent Hurricane. Or as in my case when Mrs. Cobos  left the water in the upstairs bathroom running and flooded the second floor causing water to seep through to the ceiling below.

Tree Falls on House and Destroys it - Storm Damage - Raleigh North Carolina 2011
Storm Damage from April 16th Tornado in Raleigh

You’ve settled your claim with your home owners insurance agent and you have an insurance settlement check but it’s made out to you and your mortgage company;

How do you cash your Homeowners Insurance Claims Check to Pay for the Repairs?

Since the storms that rampaged across the country  in April  and May I have received numerous   calls from customers of the bank where I work requesting assistance processing insurance claims checks in order to pay for storm damages to be repaired. Hence this post for those who have questions about the process.


Since relocating from Northern Michigan in 2007 I have lived in Garner (27529) with my wife Melanie and our four children. With personal production of 8MM in real estate sales across Southern Wake County I am considered to be a local market expert in the following communities: Garner (27529), Fuquay-Varina (27526), Holly-Springs (27540), Apex (27502), and Raleigh (27603, 27604, 27606, 27609, 27610)) which spans from downtown Raleigh to Willow Spring including Lake Wheeler. Call or email me, I’m here to help! Ricardo Cobos (919) 526-0183

Tagged with: , , , , , , , , , , ,


  1. I’m gearing up to get into this whole mess with Wells Fargo over a flood claim.

    I’ve heard stories about some mortgage companies returning overpayments to the insurance company rather than issuing them to the borrower. Is this true of some, or all mortgage companies? Is it dependent upon the amount of the overpayment at all?

    Also, does the borrower reserve the right to opt out of having certain repairs made that were identified on the adjuster’s worksheet? Or can the mortgage company require that all items are addressed per the worksheet? If the former, would the borrower receiving any overpayment from not making those repairs be considered fraud? Or maybe this is a case where the mortgage company would return the overpayment to the insurance company?

  2. My home was damaged in a storm, with a tree falling on it. Have insurance with Allstate. Which was my first mistake. Took Allstate almost 2 months to write a check. When they did, it’s written to me a Franklin mortgage company for 25,000. Which is 15k less than estimated repairs. While waiting for insurance, I started repairs myself, which I am a former general contractor , and able to do the work, and make sure it’s done right. I have spent thousands already , and also paid other contractors thousands, for the work I could not do myself. Upon finally getting the check, it’s to Franklin also. I contact them about getting it endorsed, and sent back to me. So I can put the money back into my account, that I have already spent out of pocket, to get my home back to a livable state, and also pay contractors what they require upfront to start other work. Franklin says no deal, and tells me, they will not endorse check, but will keep it, and pay contractors themselves. And any money I spent myself, or repairs I did myself, is just money lost, because I’m no longer a licensed contractor, and I will not be paid for that work or supplies. And since other contractors have been paid, and we’re not approved by Franklin, I will not be paid that money back either. They are attempting to hold my money ransom, and not give me the money I am owed for money spent already. They are crooks, that abuse the power of holding my home repairs at their mercy. Contractors instantly say no, when they are told they have to deal with this company to get paid. They say the company takes weeks, to pay, and always has some reason to delay payment to them. So I cannot find anyone to work on my home. And I am forced to pay myself, or do it myself. With Franklin holding my money, and never paying me for the work, or my expenses

  3. We had filed a claim for losses totaling about 10,000.00, work was done in March. Contractor did the work, I was told they were to fill out and send to mortgage servicer all paperwork, we signed paper saying it was done, and inspector already inspected, work is 99% done. But mortgage co says they have not received paperwork from the contractor. I called the contractor, he said they were sending it right out.Here in Wisconsin they also need to get an IRS form and fill it out. This was about 3 weeks ago. We got the ins. co. check, made out to us and mortgage co.pretty fast. This is first check, there will be another one sent when work is completed. I called mortgage co., asked if we should sign it, they said no, so we didn’t. But sent it to them, as they said to. we have not received it back yet, I guess they are supposed to sign it, and also put contractor’s name on it, either that or make out another check with contractor’s and our names on it. But I guess they have to get all paperwork from contractor first. I don’t understand why contractor is not sending the paperwork out right away. The mortgage co. has even called me asking about it, it’s not their fault as far as I can tell.

  4. Exactly. It is a normal process in most cases that the mortgage company will issue the funds in draws. A reputable contractor that has dealt with many repairs know this process.

  5. Hi. I live in Wisconsin. We have been trying to get a loan modification with ASC (wells fargo) since 2013. They had filed foreclosure suit, we spent 150.00 for foreclosure mediation, their atty. said at 2nd meeting they do not want to participate, so we had to file bankruptcy. Got behind in pmts. because of 3 job losses, identity theft, home repairs, car repairs, etc. We now have steady ,stable income. When they filed foreclosure they refused to accept payments, so we got further behind. I know now iwe made mistakes, did not make mortgage payments for months. They filed for a llift from automatic stay. Judge put us on a 6 mo doomsday, started in Nov., goes to April. Have been making timely payments which were almost missed because no one gave us right address to send payments to.I tried to make it with check by phone, they would not accept that way. My atty. office finally got paper saying where to send on the 12th (payment due by 15th ea. month), so I had to mail pmt. to them fastest way, with return signature. (court date was 3 weeks earlier). We did not get a letter about until a week after that. Our loan with wells fargo has strong evidence of robo-signing, paper for lift from automatic stay is signed by someone who claims to be a VP loan modification, but I found out she is an analyst (I callled the exec. office, asked if they have employee by that name, said they do, I asked them her job title, which is analyst). I asked if that is an executive position, they said no. Yet she signed it as such before a notary. She signed it under penalty of perjury. Can we possibly sue wells fargo? There also is other evidence of robo signing on mortgage. We had mortgage with different co., all a sudden wells fargo owns it. Trouble is, we don’t really know who owns it. There are 4 banks listed on as owners, and we got papers from a deutsch bank, 1 note, 1 mortgage, deutsch spelled 2 different ways, # on them has same numbers but in different sequence. Accompanied by several near blank pieces of paper with illegible writing obviously from a copy machine. We have damage to part of roof, from bad hail storm, leaking from ceiling in hallway. Had 3 estimates from contractors. Insurance co. sent one check to us for almost 8,000.00 and will send remaining amount (about same amount) when work is completed, made out to my husband and I and wells fargo. I called wells fargo at least 2 times, person was supposed to get back to me, didn’t, so I called again, got address. They have not sent any forms or asked for anything. I want to make sure they do release the money so the roof gets replaced.What would happen if I try to find out ahead of time from them what they will do with the check, if they say they wll not endorse for repairs and keep for arrears, can I demand they give us a modification or I won’t send or endorse check? I do not intend to cash it, probably can’t, but would hold onto it a while, and send back to insurance, or have them make it out to the contracter. I noticed on your website that there is such a thing as a charge off, if you are 90 to 180 days without making payment. We are probably overthat, although we have been making payments since november. Is this something that wells fargo is required to do by accounting or tax law? Or can we request they do it? If done, what happens with us? They have been impossible to work with. They will not send us appeal form, and say loan is at 2% but on monthly statements it is 4%. At mediation atty said we do not make enough money, I told them I would start collecting soc. sec. in Nov., I send proof. Now they say we make too much. But the mortgage payment takes up almost 1/2 monthly income, and our expenses went up over 100.00 a month. We have an atty, but he says he’s only representing us for bankruptcy, will not do anything about robosigning or other issues that from what I read sound like they could be fraudulent. I know we made mistakes, but have been trying to get on track, but they are not cooperating. There is money in suspense for months. I have tried every government agency, they are sympathetic, but nothing is being done. I would like to find out the chain of title from start of mortgage to present to see what is going on, don’t know where to go or what to look for. I think I may be able to search myself, but don’t know where to start. Need help badly. Atty. said if we don’t get a modification the trustee payments wlll go up 500.00, this is in addition to mortgage payment and what we already pay to trustee. It would not be affordable. I find it hard to believe they don’t consider an increase in your expenses when figuring things. Should I get a different lawyer? can I? This one does not seem to care at all, he has not returned calls lately, I had to call his office a 4th time. Judge said at last hearing we should get a modification by sometime in Feb., but wells fargo won’t even send appeal form. I called, they admitted no one has looked at anything we sent in over a year. this is ridiculous. thank you, pat pritchard south milwaukee, wisconsin 53172

  6. If a hired public adjuster has received the claim check from the insurance company, is he entitled to withhold the check? If not what can I do to get the check? When is a claim considered settled? How can he hold our claim check and is he entitled to a post dated check for payment?

  7. So ive been up all night for several weeks stressing over my situation and reading all these posts freaks me out more. My home was involved in a fire like 3 weeks ago and i already got a check for settlement from my insurance company that i have to endorse to my mortgage company Branch Banking and Trust (BB&T) which i will send tmr. I dnt know what will happen next. According to a bank specialist i spoke with my check will be endosed and returned in full amout I just hope its true We are very emotionaly and physically frustrated and tired we just wanna get everythig as it was. I will ask for advice depending on what will happen..

    1. HAHAHA! I’m sorry I’m laughing but after reading so many of all of the PATHETIC complaints on here i decided to reach out to you ALL who read this.

      First off Vanessa… GET OVER YOUR SELF!!!
      “Im emotional, i just want my life back” UP YOURS!!

      I bought a home in july 2014, built an addition, and just as we were tying the roofs together BAM!!!!!!!!!!!!! a noreaster comes and destroys the whole house. that happened in October of 2014, followed by the WORST WINTER IN NEW ENGLAND HISTORY!!!! the insurance company came in and gutted the house to the frame and left, then didn’t cut us a check for 6 months, the house just sat there dormant.
      Once they did cut me and my LOVELY mortgage company a check for $116,000 the Mortgage co took another 45 days to give me a little taste of the funds….
      Bought the house 7/2014… i had 2 kids
      Storm happened 10/2014….
      its now 6/2016 and my 3RD KID IS ALMOST 2!!!!!!
      were hoping to be in by the end of the summer… 9/2016

      and by the way… unless you want to become a contractor, DONT TALK BAD ABOUT THE ONES WHO DONT WANT TO GO THROUGH HELL GETTING PAID BY YOUR BANK!!!! every time a contractor takes on one of these nightmare projects, your problems become their problems… these are people with their own families to take care of. Guess what- THE WORLD DOESNT REVOLVE AROUND YOU AND YOUR BS!!!!!!!

      Here the best advice i can give ALL OF YOU!!!! when you get your insurance check, go out and get a rubber stamp of a persons signature, ANY signature (bob jones, mike smith, sara jessica parker… whatever!) get the type that banks use to stamp their name on a check… THEN…. you sign the back of the check, stamp the “bank persons name” on the back of the check also… and… deposit it at YOUR banks ATM machine.
      about a week later ta-da!!! you got your money… and to the people on here who are going to tell you you’ll get in some sort of trouble… NO YOU WONT… you wanna know why?!?!?!… because the $15 dollar an hour type people who will be processing that check from one bank to the other DONT GIVE A FLYING CRAP NOR ARE THEY PAID ENOUGH TO. they won’t even give it a second thought… you know why, cause now that money goes into their customers bank account instead of anywhere else and thats all they care about… thats all any of them care about… getting the most amount of money while spending the least amount… and that includes checking in on little old you.

      is it right… idk… will they whipe their ass with you when they have your money… YES!!!!!!!!!!!!

      or go become one more horror story on here…. good luck

      waa waaa, my house has been messy for 2 weeks, how will i live… drop dead asshole!!!

      1. I’m sorry to hear about your situation but your comments were really funny and they had me ROFLOL…right up to the point where you suggest that people commit fraud. While you have aptly described the condition at most banks, don’t think for a moment that your bank or any bank for that matter wont look twice at a multi-party check that has been endorsed with a stamp and deposited at an ATM. The fact is, that is the very thing that would trigger the bank to look closer at it because no mortgagee is going to endorse a check and return it to the mortgagor.

        1. Honestly… I know people who did it with larger amounts (or so I was told) and nothing happened. I did not do this… Sometimes I wish I had because I couldn’t of been treated with less humanity then if I were a prisoner of ISIS by the bank I had to deal with. If I were to say anything positive on dealing with that large an amount for that much damage is that you will at least be forced to be frugal… But the mortgage company I’m dealing with… I lied my ass of and sent BS invoices just to get them to release funds because they don’t have any branch in NE and if I asked for funds for a step in the process they would give me the run around… but if I snap a few pics of a insulated wall and call it mine… look the long story short is the 4-5 employees in the room that handles the claims part of that banks business is a sad and demonic existence. these people talk to me like dog shit because their on the other side of the country… if ANYONE is going to get a mortgage do NOT go with a bank that does not have a main branch within a reasonable driving distance… other wise you’ll be forced to spend a lot of time and money flying cross country when you want to strangle these people.

          One thing stands true above all of this….** NO MATTER WHAT **…. ***REMEMBER***!!!! These banks are only doing anything with anyone to make money… they don’t care if you live or die only how it effects their bottom line.

          Im not saying that a $23.50 per hour bank employee isn’t human or nice…. but they just work for the bank, its not their money, and the people they hire to handle claims are like car salesmen: You know their alive but you don’t understand how they have NO SOUL! Look into their black, dead, soulless eyes.
          “sir we have a procedure” “sir we have a procedure”- I woke up in cold sweats to that shit every other night.

          Experience is EVERYTHING… I lost my house in a storm that was half way through a major alteration and I didn’t live in it yet… I’ll check back here and there… you got questions on how things go down from this side when the shit really hits the fan, I’ll tell ya!

          and by the way if your home is wrecked and you can’t live int it you’ll have to get Hazard insurance while its vacant and that cost about $5000 a year and has to be bought up front most of the time and in at least 3 month increments.

          Ricardo I’m sure your a nice guy and want to be positive to people here, helping them…. thats a good thing. But dont sugar coat it. the banks don’t give a shit about any of us or our families… People when your shit gets wrecked bad, you’ll be on a long long ugly painful road and its end will seem like its no where in sight for a long long time… GOOD LUCK TO ALL!

          P.s. if you only had one room get messed up and its fixed within 2-3 months tops… don’t bitch, you sound like a LOSER!!! it could be WAYYYYY WORSE!!!!!!!

          peace…. Davey Jones

  8. Hi, im otr truck driver My house flooded last winter. lender placed insurance cut a check for the repairs to the mortgage company. damages are 15k adjuster wrote a check for 9k minus 1k deducitible minus he depreciated my property 2k that was damaged sent remaiding 7k to do the repairs to nationstar mortgage.

    funny thing is i cant get a contractor to do the work. because mortgage co will only send a 1/3 of 7k to start and bring the job to %50 completion. needless to say we are going on a year my home still not fixed. and more depreciation is happening.

    what do i do? to

    1. if the contractor that you have chosen to complete the repairs to your home is so undercapitalized that he can’t perform the job under terms required by your lender then I would recommend that you find another contractor who can. Afterall, your lender has put these policies in place not to make your life difficult, but rather to protect their financial interest in your house. That is done by only handing out enough money in stages to make sure the work is actually completed and that both you and they are satisfied with the work performed.

  9. Insurance and the bank have collectively dragged their feet long enough to where my roof contractor is threatening a lien. We have proof that everything is in the works for them to be paid. It is just taking more time than we thought it would. What is my recourse?

  10. I have a question. I placed a claim years ago I got the 1st half of my payment and the second half went to the bank as I was in foreclosure. I made the repairs plus which was outside the price of my original check but the repairs had to be done. I sold the house as part of my short sale and all along I advised the attorney of my situation cause I really didnt see the need to pursue the case due to the short sale being approved. My agreement with the buyer was to reimburse the buyer with my settlement of $7000 to pay for the additional repairs need in the kitchen which were not completed due to my financial situation. Now that the sale is complete my attorney has contacted me stating that they finally settled with the insurance company. Is that legitimate, its like the attorneys dont want to answer thst question. They keep stating all i need is the document showing everything was paid and they can have the check reissued. however it just doesnt sound right.

  11. […] Insurance Claims: Nightmare’s await Homeowners – FHA – You’ve settled your claim with your home owners insurance agent and you have an insurance settlement check but it’s made out to you and your mortgage company; … […]

  12. I was in the middle of a loan modification through WF when I had to file an insurance claim. I received 4 checks but only 1 with WF name on it. The other checks were for work we already done and storage, carpet removal etc.. The one check with WF is less than 10K and when I called and told them about this, they said I need 3 inspections before they can cut me checks OR wait till my load modification is complete and they will change it so I can get the check endorsed by a bank manager. The loan modification is complete and they are still asking for inspections and receipts of all the work. I dont mind the inspections but the receipts? Are they going to try and keep the money? We were given a total of around 12k for a water leak in the kitchen. The floor and cabinets needed to be replaced or repaired in the kitchen and surrounding rooms. We did the repairs and improved the house as well as other rooms with the money (my own money). I did have contractors redo the floor and new granite counter top which was an upgrade from what we had. My questions is, will they keep the money if my receipts don’t equal the check or checks? They said they only pay out for the repairs that were required from the insurance company. Do I provide them with all the receipts for the whole house or just the receipts for the rooms that were required to be fixed by the insurance company. Any advice is appreciated.

  13. this has been a great thread to prepare ourselves for the seemingly long road ahead.

    we are flood 2015 survivors in houston. we are just beginning this process and wells fargo holds our mortgage. any insights on how we can begin to cultivate a relationship with them before our claim check is cut. i would like to contact them ahead of our claim settlement so that we can try to mitigate some of the frustrations and miscommunication all of you have suffered. (i recognize this may be impossible, but here is to hoping!!!)

    thanks in advance.

  14. Hi Ricardo, My insurance wrote a check to me and my bank. Per instruction provided to me by the bank I reported the claim to my bank loan department and deposited the check. The check got cleared and the money was deposited to my account. I left a message for the bank but didn’t get a call so I started using the money to fix the damage to my house. I just received an email from the bank loan department that they have not received my insurance claim check. I would like to know what could happen before I call the bank.

  15. I deal with claims almost everyday and I can tell you Wells Fargo is very difficult to work with. They have borderline decptive practices. Just ask something as simple as what is your procedure for reimbursing me. They side step and double talk. If I had them as a mortgage company the fisrt thing I would do is call my agent and tell them the house was paid off and to endorse the policy to reflect this. Most agents won’t even question this. Then I would file the claim. It takes about 2 months before a lender places forced insurance. In the interim have the check paid to you without the bank name on it. After you endorse the check and deposit it. Call your agent and add the Mortgage back on. They can then send the mortgage a certificate of insurance showing you had continuous coverage. Even if forced insurance was placed you will be refunded as long as you can prove continuous coverage. Also I would suggest filing a complaint with the division of banking in your state. Make sure when you speak with people at Wells Fargo you document their name and id numbers. List them all in the complaint. PNC bank is not much better.

  16. I had my insurance company to re-issue my two checks totaling 70k however my house has been foreclosed and was sold in auction. The checks are made out to me and mortgage company. since the house has been sold already and bank got his money, can i have them endorse the checks and how can i do that?

    1. Unless the proceeds from the sheriff’s sales was sufficient to pay off your indebtedness and any legal fees there’s not a chance in Hades that your mortgagee will endorse those check. You would be better off sending them the checks because it will reduce any future liability you might owe.

  17. How is it that I pay my own house insurance and I had a flood, which cause me to file a claim. The check is made out to me and my mortgage company. Which I must endorse to them and they will hold the check sending me half now half when the job is done. How is this when they don’t pay my homeowners insurance. How can they just step in and do this?

  18. we moved to SC and house was up for sale and they FINALY just released the check. They were told we left the heat on but still went and hired Aim Your Way Llc to distroy my home

  19. Coldwell B, what happened is that i saved a substantial amount of settlement about 3/4 since i got licensed contractor who is a long time friend and waived labor. They authorized water mitigation check, and contractor check and they still need to give me back about 30k from that money, from which i still have to pay adjuster fees. After i was promised otherwise and having them warned about my intentions to save money while still doing a nice job, now they are saying that they will only release amounts on invoices. I explained that the repair is done 100% , that i have no more invoices, and that the total received by insurance was just a settlement of the case prior to litigation. About 40k. I’l be honest i did a lot of help on the repairs but everyithing came out nice and checked out in the inspection which i requested as a final one, i never requested a 50% inspection. I have to see my attorney next week but just like you she says that she has never seen that before in her many years of litigation, especially when 100% loan history. I feel helpless against those people, they are rude and i feel fooled with and extremely upset. where can i find this info since i m in Florida. I appreciate your help and your time, thank you

  20. Have competed the repairs 100%, never a late mortgage payment, i am up to date in everything, including escrow. The repairs are done and the still wouldnt send me the remainder of the settlement check. They argue that they will only release the same amount used in the. Repairs of the water damage. I already talk to my attourney and i am waiting for advice.

  21. I’M a roofing contractor in Kansas City. We had a major hail storm in 2011 and we did many insurance claim jobs. I found Wells Fargo to be very hard to work with. They wait up to 3 months to release final check. This causes problems for contractors as they have to wait for their profit and payrołl.

    Statefarm was much easier to work with.


    1. Given their sheer size Wells Fargo is no doubt going to be a difficult company to work with and I will not attempt to defend them but comparing an insurance company to a mortgage company is truly comparing apples to oranges! So in you experience with Wells Fargo have are you able to share any tips or best practices?

      1. I am going through absolute hell with Wells Fargo Home Mortgage. Wells Fargo hired a company to winterize my home while it was on the market to be sold and we moved to the South. Well, It wasnt winterized correctly which caused over $28,000 in damage. They refuse take any blame in the matter and yet sides with the company that caused the damage saying it was done right. Now they are keeping my Depreciation check due to delinquency on my account. They destroyed my home and prevented an actual sale of my home, caused us soooo much stress and yet they still continue to demand to hold OUR money. We were out $9300 out of pocket expense and this is the way they run things. This is why WF is ALWAYS being taken to court.

        1. Wow – you’ve managed to shock even me. I’ve never heard of a lender taking it upon themselves to winterize a persons home unless that home had been abandoned. You said your depreciation check was retained by Wells Fargo to cover your arrearages. Was your home in foreclosure?

          1. Mister Cobos- Question for you, i have a good problem on my hands. We had flooding in our home and the insurance company is cutting me a check $3k MORE than what my contractor is charging. My insurance company will cut an initial check and with hold $900 until I send proof of cleared payment from the contractor. Can i pocket the difference or will i need to return the balance to my insurance company? THANK YOU!

  22. Mr. Cobos, I’m wondering if you have any experience with a situation such as the following:

    We had a tree fall on our house in December of 2012. The tree was dead and fell from my neighbor’s yard into ours. Fantastic neighbor – he offers to cover it with his insurance, but we decide to let each of our insurance companies figure out responsibility. The tree did some structural and cosmetic damage to the exterior and interior of our garage (and bonus room above.)

    My adjuster came out quickly and cut me a check on the spot, minus my $2500 deductible. I happened to be in the process of doing some home improvement, so I had the same contractor bid on the work, and his bid was about $1000 over what the adjuster estimated. They haggled and the claims adjuster raised his estimate by about $700. I contacted the adjuster about getting a check for the difference, and he said that check would be not be cut until the repairs were completed. (I can see the mortgage bank not wanting to release the funds, but the insurance company?)

    In any case, since I did not have the deductible in hand, I had the contractor fix the structural work, and the exterior cosmetic, but was going to hold off on the interior cosmetic unless/until my neighbor’s insurance took responsibility. Well they did, as I just got a notice from my insurance that I will be receiving a check to cover the deductible. (But only the deductible.)

    So my questions are these (and I really want to do what’s ethical, not just borderline legal):

    1) Since my neighbor’s insurance is covering the loss, does my insurance company have the right to withhold cutting me a check for the additional $700 from the adjusted estimate?
    2) Am I obligated to use the $2500 and/or $700 to make the cosmetic repairs in the estimate? I will be adding a dormer to the bonus room in the foreseeable future and can’t see doing work that will just get ripped out.
    3) If I am obligated to use the $2500/$700 for cosmetic repairs, and don’t want to, do I need to contact my neighbor’s insurance company to make sure they have not over-reimbursed my insurance?

    Thanks in advance

    1. Tad

      You may have noticed that I seem to get the same two or three questions or a rendition thereof asked repeatedly so it is refreshing when I receive a truly unique question such as yours. I actually reread your question more than once to make sure that I fully understood both the circumstances as well as the moral/ethical concerns that you are faced with.

      First, let me tell you that you are truly blessed to have such a great neighbor! They say that good fences make for great neighbors but I say it’s great neighbors who make great neighbors! Here’s the thing, yes, you should use all of the money to restore the home to it’s pre-disaster condition or better because that it what the purpose of having insurance is intended to do. Insurance protects the homeowner from having to write those checks in the first place. However, as a property owner there is nothing ethically binding you to repair, restore or improve the property on anyones timeline other than you own. HOWEVER, if there is a mortgage on the property, your mortgage aka deed of trust might have something to say about that, therefore I would recommend you read this post if you havent already and then review your own mortgage documents to see what you agreed to when you took your banks money to buy this home.

      That being said, you sound like a pretty honest fellow to me who seems genuinely concerned about doing what is right and so I am sure that with such a strong moral compass, you will do what is right, regardless. Therefore, if it is your plans to make major improvements to the home that would cause the cost of these cosmetic repairs to be wasted, then I recommend that as long as the repairs aren’t exposing the house to risk of further damages, which it sounds like that’s not the case, so long as you are current on your mortgage payment, which it sounds like you are, then I would say do what is right. Put that $2500/$700 to better use which would be by waiting to make the improvements that you are already planning which will likely have a greater positive impact on your homes overall than simply repairing the cosmetic damages that you are putting on hold.

      Think about it like this; if you were self insured and all things were equal would you make the repairs now, or wait until the project completes the need to work through that area?

      I hope that helps, thanks for the great question!

  23. dear mortgage guy,we were in the early stages of forclosure with bank of america,on april 16th they sold mortgage to resurgent on april 18th i had a major flood,when i called resurgent about flood claim how to handle insurance check,it probably 75 k in damages,i know this because we had same thing in 2008,plus a minor fllood every year since 2006,that is the reason why we decided to walk away from mortgage resurgent informed me that will not reimburse me for any money i spent and would not reimburse for furnace,water heater clean up or appliances all which are covered by insurance,plus they want me to hire contractors for repairs,which im leery of because i dont want to be sued if they dont reimburse,any suggestions,were about 26k behind,thanks syl

    1. Syl – thanks for your question. Before I answer your questions tell me what your plans are with the house. Do you plan to work out the past due payments so that you can keep from losing your home to foreclosure?

      1. hello,we do not plan to keep due to the yearly flooding and the inability to sell because of so many floods,we have been here since 89 but are upside down,and value decreased from 260,000 to 90,000,but we do plan to stay for 6 months to 18 months and just need the basics,not really vested in a big overhaul of house,we did that in 2008 and was a nightmare to get reimbursed,and have flooded evey year since 2008,replacing the furnace,water heater and washer and dryer every year,im thinking its probably best to do nothing since mortgage company may like money over repairs,but certains things had to be done now,like clean up,and hot water tank,thanks syl

        1. OK, now I have a better grasp on what’s going on. First; recall from the original post, your lender is a party to the check because they have a vested interest in the property and judging from your comments, it sounds like they have a greater interest than do you at this point in time. Recall too that you have a contractual obligation to make the repairs as soon as possible in order to prevent further economic decay to the property. The twist here is that the same contract that impels you to keep the property in good working order is the same one that requires you to make payments every month as agreed in the Note that you also gave the bank.

          Because you are in foreclosure, the bank has no obligation that I’m aware of to release any of the insurance proceeds with the exception of those designated to replace personal property such as clothing, furniture and in some cases appliances. Each state has different laws concerning what does and does not constitute personal property. For instance, in North Carolina, a refrigerator is considered personal property, as is a stove, but a water heater is not. However,when there is both personal and real property loss, most insurance adjusters will normally issue two checks. One check will be issued directly to the homeowner(s) for their personal property loss while the second is issued to the homeowners(s) and mortgagee(s) as they may appear in title.

          Bottom line here is that as long as you are in foreclosure you should expect very little cooperation from your mortgage lender to release insurance funds for repairs because they would probably rather have their hands on that fat check and sell the house for what they can get for it. Your mortgage lender has probably already arrived at the conclusion that you plan on staying in the house rent-free as long as you can while the foreclosure process stretches out, but this flood has just hastened that timeline.

          It’s probably time to figure out how to get your mortgage current (without the use of the insurance funds) or start looking for a new place to call home because to start hiring contractors will only cause you more trouble when the bank decides not to release the funds to pay for the work.

          1. hello,to be clear,if i did any repair or replacement covered by insurance,the mortgage company is not legally compelled to reimburse and on the other side am i legally compelled to endorse check,,thanks for your time syl

          2. I cannot offer legal advice because I am a lender not a lawyer. You should consult an attorney for clarification of your legal responsibilities. The fact that you could face significant liability because of this foreclosure is reason enough alone to get legal advice.

            What I can tell you for sure is that if you don’t endorse the check and send it to your lender not only will you never get your home repaired but you will not accomplish anything other than establishing your unwillingness to do whatever needs to be done in order to protect and preserve your home from further damage.

          3. hello again, i do have a foreclosure lawyer who unfortunately has no idea on insurance claims and what to do,ive called him twice,i have spoke to fema,brokers,ins agent, and adjuster,no one seems to know an answer,you were my last hope,i am very willing to fix home and bring it to where it was,but like you said previously the mortgage company may not pay the contractors,then i can be sued,so im at an impasse,the house as is,is habitable,ive cleaned and had a contractor install a hot water tank,and we removed all debris,i love my house,all my kids have been raised here,but the constant flooding is just too much,we tried to sell but when you have had 12 flood claims in 22 years no one wants to buy,again thank you for all your time,syl

  24. Bottom line is that when you are not late on your mortgage payments (ever), the bank should not have the right to sit on any checks. We are experiencing the same problem with our mortgage holder. Correspondence after correspondence, phone calls after phone calls, same language same broken record BS daily without any results. As we speak, we are living on concrete. I even sent them cancelled checks, contracts etc. but I think you are talking to the walls. Everything is to their advantage. CROOKS

  25. On June 26, 2012, We had a house fire that was caused by our propane grill. RVOS Insurance adjuster came out on that Friday, June 28, 2012 and said that we would need to get at least 3 estimates for damages, that they no longer do initial appraisals. I notified my mortgage company (Wells Fargo) who we did not sign a loan with but they bought out our loan from another company. They sent paperwork of what we needed to do once we got insurance check. We ended up getting 5 estimates, it was so many because it took so long to get some of the first ones we contacted to get their estimates done that we thought they weren’t going to get them done so we contacted two additional ones. Our estimates were $112,000, $118,000, $140,000, $160,000, and $181,000. After two months and finally getting three of the estimates in we sent these to the insurance company after getting the final two estimates sent in the insurance company they wrote their estimate off of the estimates provided. A few weeks later the insurance company ask us what contractor we were going to use? We told them we wanted to see what they were going to appraise our estimates at. They told us the 160,000 and the 181,000 were too high. We had a problem with the $140,000 estimate, the contractor ended up playing golf with our adjuster and sent his estimate straight on to the adjuster without notifying us, so we refused to use him. So we chose the $118,000 who was a local contractor. The insurance then adjusted us at $118,500, but cut us a check to us and the mortgage company for approx. $96,000, keeping $21,000 for depreciated security. Once we got the insurance check and looked it over we noticed a lot of things like a brick wall that the fire had bleached out that was going to have to be replaced that was not accounted for in the insurance estimate. We notified our Insurance Adjuster to come back out and meet with us and our adjuster. We explained that there were some concerns that we had about some of the things not being in the insurance estimate. The insurance adjuster said that if it was in the contractors estimate that they would not pay more than the contractors estimate that we chose to go with. We sent in our check to Wells Fargo Property Loss Dept. (we are not or have never been behind on our mortgage payment and still have to make a mortgage payment every month). The mortgage company set it up in escrow and release it in 1/3 increments. The first 1/3 came in September. So finally 3 months after our fire and being out of our house we have the funds to get the contractor started. We rocked along and got the next 1/3 at 50% completion. We have called for a final inspection to release the last 1/3 and the inspector said we are 75% and they will not release the funds until 100% completion. Between the insurance company holding approx $21,000 and Wells Fargo holding $32,000 that is $53,000 that we need to finish our house and can’t. Our contractor is going have to pull his guys off our house next week if we don’t get the funds released. We told Wells Fargo in the beginning that the insurance company was keeping a depreciation to protect our and their interest, they said they were not concerned what the insurance company did they have a policy and that is what they do.

    1. I forgot to mention that our insurance company would only pay living expenses for 6 months from the time of the fire. So since I’m in the 7th month now we won’t have living expenses paid if we continue to be postponed.

  26. Hiring a public adjuster and/or an attorney will speed up the process dramatically. Both speak the same language as the insurance and mortgage companies and are familiar with the process. At the end of the day, everyone wants to move their workload along, get required documentation for the file, and close claims 🙂

  27. First floor of house ruined by Sandy,…here’s my issue… Third party Insurance Adjuster (hired by flood insurance company) determined that there was $64,000 of damage to my house. He then sent my file to the flood insurance company for final review. In the meantime (a month has passed since he did his initial visit), he sent me 2 checks. Each made out for $20,000 and specifically stated that these were advance checks to begin reconstructing the damaged property. I signed and mailed to my mtg company who was also listed on structure advance checks. During the first month I was hiring local contractors who were all asking for cash. 90% of contractors didnt want to hear about insurance they wanted cash or they moved on. So I was doing the construction with cash out of my pocket but did not obtain receipts.

    My credit union (mtg company) informed me that they could not cash my advance checks until I could provide them with the adjusters report and/or receipts from contractors. Unfortunately this was not a finalized document. Insurance adjuster spoke with mtg company and explained that these were advance checks and that they were only a portion of the setllement. However, until the claim report was signed off by the flood insurance company he could not tell the mtg company the final settlement amount that he put in for…he said that this could take a few months as they are all backed up.

    Mtg company told me they were sorry but they could not cash advance checks and that I would need to provide contractors invoices in order for them to release some of the funds…I tried to explain to them on several occasions that I didnt have money to pay contractors and that this was the purpose of the advance checks…They said well send a contractors estimate, I explained to them that I did..the contractor listed the scope of work and a single dollar amount….Credit Union said sorry they still could not provide me with advance money. That the contractors estimate was an estimate and not an invoice…..Is this legal? I thought that advance checks are for homeowners to use to start making their house livable….contractors arent doing the work and then waiting for insiorance companies and mtg companies to pay them…

    So now I have 75% of the work completed…all cash out of pocket….bank is still holding my money…I have told them to send an inspector down to confirm that the majority of work is done, send me some money…but they said you are only entitled to 1 home inspection and that is when all work is completed…

    I am going to have a contractor draft up one invoice and put down services rendered. Listing everything that has been completed and a $40,000 invoice….so a couple of questions….

    Is this legal what the credit union is doing with my advance checks? If a contractor sends me an invoice will checks be made out to me or to him? will credit union send contractor a 1099 so that he will have to pay tax? will the difference between contractors invoice and flood settlement be given to me? if so, will this be counted as income and I will pay tax? Thanks for your knowledge.

  28. I have been a victim of hurricane Sandy. I am awaiting my first advance check for repairs. My question is: If I get a total of say, $50,000 to do the repairs and it only costs me $45,000 (and it’s repaired to the satisfaction of the mortgage company) do they return the $5,000 to me? BTW I have a reverse mortgage.

    1. Rich – On the positive side of things, at least you only sustained $50,000 in damages and have a home to repair. I only hope that you didn’t lose any loved ones because so many people did. Anyway, I’ve answered a question similar to your question before in this thread and you can find a more detailed reply here;

      In a word the answer is Maybe. Under most circumstances you should be able to keep the excess money, however, because you have a reverse mortgage, essentially a revolving line of credit, it is a different agreement.

      Your security agreement will spell out the terms of how your lender will release those insurance funds to you in the section which is titled Hazard Insurance, or a variation thereof. Please check back with me and let me know if it says something different.

  29. Can I just say what a relief to uncover somebody who actually knows what they are
    discussing online. You certainly understand how to bring a
    problem to light and make it important. More
    people really need to look at this and understand this side of the
    story. I was surprised that you’re not more popular since you certainly have the gift.

  30. I received an insurance check made out to me and Suntrust who hold my mortgage. The amount of the check is 20k, which is more than the repair cost estimates I have gotten. I understand I have to file the necessary paperwork for dispersal of funds from Suntrust but when the job is completed, will Suntrust release the remaining funds to me?

  31. Ricardo,
    We need to know where to go for help. We have storm damage to our house. Insurance paid to us and our mortgage company (US Bank). Filled out all Loss Draft paperwork (that’s what US Bank calls it) as instructed. Had a contractor make some repairs. The contractor demanded we pay the day the job was completed. The only option was to put the amount on our credit card. We had an inspection done, which the inspector said was 2/3rds complete (roof still has to be fixed before it is considered 100% complete and it will take a couple months before the roofer can even schedule us-had a lot of roofs damaged in the area). Before sending in the signed and notarized mechanical lien release from the contractor, I called and asked the loss draft department what to do because the contractor was demanding payment before he finished the job. I explained that we had paid the contractor in full and was told by the customer service department of Loss Drafts to show zero due to the contractor on the mechanical lien release and they would send a check to us for 2/3rd of the insurance check (they still haven’t sent the first 1/3rd as stated in their paperwork). Now, the loss draft is refusing to release any funds because they said it has to be paid to us and the contrator. No where in their paperwork does it say the money has to be released to the contractor. We are current on all mortgage payments so there is no reason for them to withhold the funds. Is there an agency that we can go to for assistance? We are in Illinois and do not know where to begin. We don’t want to go to a lawyer because that means more money out of our pocket that we don’t have!

  32. where is the help for the contractor? I feel for the homeowner as I myself witnessed a family member be ripped off by a contractor several years ago. Now as my husband is a contractor doing repair work for hurricane Irene victims I am seeing the other side. He did numerous jobs and I can count on one hand how many he was actually paid the full amount he was due. Several people got the money for contractors profit and overhead and just kept it as if they were due the money. We had homeowners who had us do alot of work tarping and meeting with their insuance adjusters on numerous occasions they got the check and tole the insurance company not to speak to us anymore which they won’t and he homeowner kept the money. Im told the only route wAe have is to take out a lien or small claimscourt. Seems ver unfair for the contractor who went out of his way to help.And yes all the customers had signed contracts stating if insurance approved the claim they would allo us to perform the work for the agreed amount.

    1. Amy – It is terrible what you are describing. Unfortunately, this seems to be representative of both the moral and economic decline of our country today.

      If your homeowners are refusing to pay you what they owe you, and you have earned that payment, and it was agreed to, then you should use every tool at your disposal to make them pay.

      In North Carolina, one simple and effective way to protect yourself from unscrupulous homeowners is to file a Mechanic’s Lien against their property. Contrary to some thoughts, a Mechanic’s Lien doesn’t have to be filed before work begins in order to provide protection to the contractor. In fact, a Mechanic’s Lien probably shouldn’t be filed unless the homeowner refuses to pay because it sends a message to the homeowner that you distrust them, and why would you want to engage in business with someone you don’t trust in the first place? Personally, I believe that most people are still good and honest people and will not try to beat you out of money that they owe you.

      So when should you file a Mechanic’s Lien? I can’t speak for all states, because I am not an expert in all states, but here in North Carolina, a Mechanic’s Lien is a lien filed for failure to pay a contractor or subcontractor for work provided for a specific property.

      In North Carolina, a Mechanic’s Lien must be filed within 120 days of the last day that labor or materials were furnished to the property. Once a Mechanic’s Lien has been filed, it will be effective back tot he first day that labor or materials were furnished to the property which means that your lien could become superior to say, a recent mortgage or even deed transfer that could have occurred, making your little Mechanic’s Lien a real problem to the homeowner.

      Most often, the Mechanic’s Lien will resolve your problems, and it guarantee’s that you will be paid with interest…eventually.

      On the other hand, Small Claims Court is an option, but one that you should consider carefully because at best it will provide you with a general lien, which in my opinion is less valuable than the specific lien benefits of the Mechanic’s Lien, but worse case, could end up costing you more money in time and fees, and you could have a judge rule against you.

      Good luck, and don’t be disheartened, we need more reputable contractors like you!

  33. We have a $10,000 claim on our house for our roof and siding. According to the insurance company, they will write the check to my husband and the bank (Webster). We had originally thought we would be able to complete a lot of the work ourselves or by family friends to save money and use what is left for making other improvements to our home so we can sell it. However, after being told that they will only give us 1/3 of the money at a time and that we will need provide reciepts in order to get the money, that is not going to be possible. We have looked into actual contractors to do the work, but for siding and a new roof the bids are well over $10,000… what can we do to makes this actually work for us?

  34. We have one (1) 25k claim for recent hail damage to home and garage, Like most folks we are somewhat behind on our payments (I say somewhat, because any behind payments have found a place on our bankruptcy trustee’s list of payees) Suntrust has requested more from “our” (Suntrust and Homeowner) 25K check than what they agreed to accept in formal bankruptcy proceeding. Stating that loan servicer Fannie Mae stipulates they MUST put the money in a protected escrow account and can not or will not release even the first 1/3 draw (of which 50% of the repairs need to be made) until the account is made current. Even though we have legally come to an agreement on what “current” is; Isn’t this money set aside for the repairs on the home? To make sure the repairs get completed correctly? Why would they(Suntrust alone) be entitled to any “left over” amounts, when they’re already making money off the interest?

    Now the good point, We were able to set down in front of a Suntrust representative at a local bank and get the paperwork “expedited” by “inter-office” carrier. Did that help the process any? NO. They’re still dragging their feet, and requesting more documents via fax while my roof sets here in 30 lb. tar paper waiting for the next big gust of wind and some afternoon downpours. I’m surprised they haven’t lost this paperwork along with the home loan modification forms we submitted over a year ago. Perhaps this feet dragging has more to do with the fact that they are pushing my loan to Seterus tomorrow.

    They know this isn’t a fraud case, others in our area have the same damage, and we haven’t filed a single claim in 17 years of being a homeowner. Even if we did want to “R-u-n-n-o-f-t” with the check, who would be silly enough to cash it?

    Ohh, who put the tar paper down? We did, with money out of our own pocket. There aren’t any “certified home restoration specialist” in our area that work with our combination of insurance and mortgage company. Plus, being one of those “out of work contractors” the money for the repairs would fit better in our pocket.

  35. I have a 30K claim that was paid by the insurance company and the check was made to me and to Bank of America. I hired a person to do the work in my house in which I sent the bank his w-9 and Liability insurance. He is not a licensed GC but the only work being done on the home after the licensed plumber repaired the leak is replacing drywall, tile, paint and wood floors. There is no structural or electrical work being done yet Bank of America is insisting on a licensed GC. They told me that they “prefer” a licensed contractor to do the work and that Fannie Mae has requirements. Am i required to use a licensed contractor or can I have the gentleman I hired finish the work he has started? What are my rights as the homeowner to get funds dispersed?


    1. Leon – the only “requirement” that Bank of America can use to stipulate the use of a licensed GC is your local and state ordinances.

      For example, here in North Carolina, repairs and improvements that cost less than $30,000 in total do not require GC license. However, in such instances, if permits are required, they must be obtained by the homeowner.

      While I can understand why your lender “prefers” you use a licensed contractor, it is for all intent and purposes as relevant to say, your “preference” that they cease charging you interest. Both are preferences, but neither are binding. Best of luck!

  36. About three years ago, I noticed water spots on my bathroom ceiling. I immediately contacted a roofing company to come survey and repair the damage. I was told there was a valley right above my bathroom that had been clogged with yard and tree debris causing water to back up and drip through the shingles. This seemed like a fair assessment to me so I let it go. At least twice a month (if not more often depending on the season) that valley would be inspected and swept to insure no more leaking would take place. Not quite a year later, after several days of rain and storms, I noticed a hole in the ceiling. Phone call to roofer #2. They recommend filing a claim with my insurance company which I do, immediately. An adjuster is sent out and promptly informs me that I do not have enough “hail” damage on my roof to warrant a full replacement. He cuts me a check for his recommended fix to the roof, repairs to the ceiling in the bathroom and new gutters. After subtracting $1,000 for my deductible, the check totaled $300 and some change. The adjuster and roofer #2 offer suggestions on how to repair the roof for the lowest cost. We make the repairs suggested to us and cross our fingers until the next storm. Not surprisingly, the roof is still leaking. So, we try again. No such luck. I immediately called the insurance company to let them know what is going on. Well here’s where my claim virginity came into play…the recommended repair on the claim form differed from the repair that was recommended verbally. The damage is not considered repaired if you act as your own contractor. This makes perfect sense and I file this knowledge away for future reference. We call roofer #3 (in the meantime roofer #2 has been shut down for illegal activity…hmmm…good thing they didn’t touch my house!). He gives us an estimate for replacing the entire roof but is unable to quote the repair since that particular company will replace no less than a quarter of the roof. So we call roofer #4 (in my mind, roofer #5 including the adjuster) after doing an extensive search with the Better Business Bureau. The owner comes out first, give us an estimate and recommended repair and we hire him. A week or so later he calls to let us know the job is done (a little bizarre…but how a lot of contractors are in this area…they leave no sign they’ve been there!) but he won’t invoice us until we’re sure the leak is fixed. Lo and behold, the next rain comes through the ceiling. We called roofer #4 back and he came out again to do some more work. Everything seems to be ok at that point and we pay the $800 we were invoiced and proceed to repair the ceiling. Fast forward to this weekend. The rain is pouring…and the ceiling is leaking. We have contacted roofer #4 who is extremely apologetic but honest when he tells us we need to fully replace the roof to guarantee the leaking will stop. He is willing to use our $800 as a down payment and allow us to make payments on a new roof (we just paid $3,600 to replace the A/C and heat pump in our rental so we don’t have $7,000 available. This is obviously a great deal…but we have paid well over the $1,000 deductible AND gone above and beyond the claim’s recommended repair. Seeing as my mortgage company holds an interest in the property, would it be wise to contact them to see if they could assist us with the insurance company? To some degree I understand the concept of not allowing full roof replacement unless there’s enough evidence of hail damage to warrant it, however I’m rather skeptical of how that is determined. Our rental’s roof had no obvious damage but was replaced after a five minute inspection by the adjuster. A friend’s roof was deemed not replaceable by a reputable roofing company but an adjuster disagreed and paid for it. It seems there’s a fine line and also depends on who the adjuster is. Considering a continuous leak is depreciating the property value, I thought it might be possible to at least get another adjuster out for a second opinion. What are our rights? Should we just set-up a payment plan with roofer #4 and forget about it? Should we send correspondence to the corporate office of our insurance company? Should we send correspondence to the mortgage company to ask for assistance? Any thoughts, opinions or suggestions would be greatly appreciated.

  37. My friend took his insurance check and skipped the mortgage company and just deposited it into his account. He did the work + extra and never heard anything from anyone. I now have an insurance claim and after reading many posts about my mortgage co. I was wondering if I could do the same thing? I relize that it may be kicked back by the insurance companies bank but want to skip the hassel of doing the whole inspection thing. i am up to date in my payments and I am completing additional work in the house outside of the scope on my own dime.

    1. Kevin – it is a rare that a bank will allow a person to cash a two party check without the proper endorsements of all parties to the check. Your friend may have gotten away with it but do you want to take the risk? After all, some might call what he did fraudulent.

  38. Hello Ricardo,

    Ameriprise and I have agreed on an amount to replace my front doors that were damaged in a break-in (June 2011), approximately 7k. I’ve been busy with other stuff so, now I would like to proceed with the disbursement of the check. When the break-in occurred my bank was Flagstar. I refinanced my house Feb 2012 with a new bank. New appraisal order by the bank, and received a new loan based on the as is condition of the house regardless what needed to be fixed. The insurance company says the new bank has a financial interest in my home. This is true they have a financial interest in my home, but the new loan agreement had no stipulation that anything had to be fixed.The break-in occurred before my new bank took over, how is it that there name needs to be added to the check? I do intend to replace the front doors.
    What do I need to do have the claim check made out to me only?

    Thank you!

  39. I’m going to try and keep this short, hope some one can help. I had storm damage from hurricane Irene. My insurance co made us do repair with PWI (payment when incurred) We did all work all repairs. We have had 3 checks so far all have been to us and MC, they signed off on all checks with no problem. Last check was issued 3 weeks ago and now they say they won’t sign the check. First they said they needed it inspected, they sent inspector who reported it at 100% complete. Now they say they won’t cash because we are behind in mortgage (because we had to do repairs PWI) We told them cash check and we will pay mortgage. They refuse. 1 department said release money and they will work with us, we go to bank to have it endorsed and are told NO there is a hold on our account. We call again and the guy who released said HE didn’t understand what they are doing. I was put on a 3 way call and again was told OK to cash, again went to bank and was told NO. Now they all say NO. Whats up? I just want my money so I can catch up on my mortgage and other bills. Who can help and how do I get this money? Help

    1. George – it sounds to me like you are dealing with Super Big bank because a community bank or credit union wouldn’t put you through such foolishness. It sounds to me like the classic case of your lender (the mortgagee) not fully understanding the covenant they entered into with your (the mortgagor) or their legal obligations.

      Assuming that you have a conventional loan, not a commercial loan, then you probably have a very uniform mortgage (some states call it a Deed of Trust, read more here). You need to dig out your closing package from your most recent mortgage transaction. It’s probably sitting in the bottom of your office or filing cabinet. Find the document called Mortgage, it is the document that governs this problem. Specifically you are looking for the chapter heading “Insurance”. Here is where you will find everything you need to write your lender a letter demanding they apply the proceeds of the check they are holding (if they don’t have the check you need to send it with the letter) to your past due payments and if there are excess funds to immediately send you the difference. Be sure to send the letter and check via certified mail/returned receipt and make sure you send it to the escrow department, NOT the address where they receive payments otherwise your letter will never be received by someone who cares.

      Please let me know how this turns out for you.

  40. Ricardo, your acumen and knowledge is without peer. I have read all the posts here and geez! if I may just one simple question as I get alot of conflicting data. Tornadoe came thru a few days ago only minor damage and received Ins. check for 7,058.00 of course it has Indymac on it as well as me. Am I going to get any of the funds to start repairs? or is this going to be another one of the nightmares like I am seeing here in this forum?! Thank you for your time sir. Paul

    1. Paul, your flattering comments are appreciated but I’m afraid they aren’t going to make what I have to tell you very palatable.

      IndyMac is an unusual situation because there are one of the few banks that was actually taken over by the Office of Financial Thrift Supervision during the very early hours of the financial melt-down. Which means you get to deal with not only a mortgage company but also a governmental agency!

      A cursory review of the IndyMac website turns up little information other than this, “Please contact our insurance claims department at 1.866.258.8181 for instructions. Do NOT send your claim check with your mortgage payment.”

      I recommend you call IndyMac immediately and begin to document your process for posterity in case you need to hire an attorney.

  41. What do you do when the town tells you you can’t rebuild your house and you have a check for $60K that the mortgage company told me to sign over the check. Who gets the money then? Do I re-adjust the insurance and get another claim in? What do I do?

    1. Danielle – yours is a multi-part question so it requires multiple answers:

      QUESTION: What do you do when the town tells you can’t rebuild your house?
      ANSWER: Hire an attorney who specializes in real estate law.

      QUESTION: have a check for $60K that the mortgage company told me to sign over the check.
      ANSWER: If there are additional insured names on your policy then you have no choice but to obtain their endorsements before your bank will allow you to deposit the
      check. Attempts to cash it without your lenders (or all parties) endorsement could constitute fraud.

      QUESTION: Who gets the money then?
      ANSWER: A better questions is; How does the money get disbursed to repair my home? The money is intended to restore your home to its pre-disaster condition. Your lender has a policy that varies from lender to lender. Depending on whether or not your mortgage loan is current or past due will depend on how cumbersome the process will be. And in your case, whether or not the home can be rebuilt.

      QUESTION: Do I re-adjust the insurance and get another claim in? What do I do?
      ANSWER: Unless there is another claim, there is nothing else to “re-adjust”. However, if your strategy for re-adjusting the claim is to have another check issued, unless you have the most incompetent insurance company modern times you will receive another check that look just like the one you have already. What you need to do is get on the phone to your lender and begin the process of sending them the check and additional exhibits they will require in order to begin the process of repairing your home.

  42. My question is WAY DIFFERENT. I was actually paid a claim 18 months ago to repair hail/roof damage to a house I was trying to short sale. The buyer knew I had the claim to repair the roof and ceilings and put it in the contract that they lender would allow the repairs to be completed with the claim check. they insisted the claim check just be GIVEN to them and NO repairs would be allowed. I refused to sign over the check because the money was not going to be used for the intended repairs and I felt it was insurance fraud. The bank let the house go to foreclosure. We bought the house back after foreclosure and put the cost of the repairs into the new mortgage loan. I assumed the insurance claim money was lost. Then around Thanksgiving, I get a letter saying the check was never cashed and they were re-issuing the check, which they did, only to me and the OLD lender. I called to tell them I no longer had a lein holder in my name and the check should be re-issued to just me and I had proof that we made the repairs as was intended from the initial claim. Now they are saying they will only cut the check to me and the OLD lender that doesn’t exist anymore. Can I just sign and deposit the check thru and ATM and use the money to pay down the loan we got for the repairs?

    1. BB – I agree; yours IS WAY DIFFERENT and has many moving parts. And because it is so interesting I am going to break down each of the moving parts as I understand them.

      1. You bought a house and didn’t have cash to complete the sale;
      you solicited and obtained a mortgage for the difference from a lender.

      2. Your house sustained damage and an insurance check was issued to you (the owners) and your mortgagee (the entity you borrowed the money from in order to become the owner when you bought the house from the seller).

      3. You defaulted on your mortgage (you stopped paying as agreed) either before or after the date of the claim.

      4. You asked the mortgagee to take less than you owed them because the home you purchased depreciated in value (short sale).

      5. Your mortgagee agreed with the proviso they not sustain 100% of the losses on your real estate purchase but that you share in it by letting them keep the insurance proceeds.
      6. You refused on the moral grounds that it was insurance fraud which caused the purchaser to rescind their offer.

      7. You failed to make numerous payments and in order to prevent further losses the bank sought to stem those losses by the legal process of foreclosure.

      8. You bought your house a second time, this time in a foreclosure sale (presumably for less than you originally agreed or owed). Somehow you managed to convince another bank that you wouldn’t screw them, otherwise it was someone else who bought the house in their name under the false pretenses they would occupy the home, and that lender financed the repairs too (that alone could be fraud).

      9. Now you have another check for the very same claim which is made payable to you and your original lender who I point out has lost untold thousands of dollars because they decided to lend you money and you feel it is YOU, not the LENDER is entitled to keep the proceeds; you are even willing to attempt to cash the check without their endorsement.

      Do I have it correct or did I miss something? If it is correct then please answer my questions;

      Just exactly why do you feel that you are entitled to this money which the repairs you never paid for in the first place?

      Why would you think that cashing a two party check without the knowledge of the second party ISN’T fraud when you accused your mortgagee of fraud for less?

      1. Thank you for your attempt to answer my question. although, I do feel some hostility due to having your interpretaion of events mixed up.

        1. My house value plummented 60%, my income dropped 80% and I had tried for 3 years to dig out and sell everything I could, drained my bank accounts – all to no avail. I actually had a friend that could purchase the house, but, not for what was owed. Again, the value had dropped 60% over what was owed on the house. Due to my dire financial situation, the only thing I could continue to pay was the homeowners insurance and the utilities. I had serious hail damage and my roof was leaking. I had an roofer come out to look at the damage and HE told me I should file a claim for hail damage, which I didn’t even know you could do. The claim went thru and the check was sent to me and the lender.

        2. The lender had set a price for the short sale, which my friend agreed to, but, there was that claim check sitting out there to repair the roof – not a cheap thing to fix as a buyer. So, he wanted to make sure me and the lender would allow the money to be used to repair the roof and ceilings before he closed. The lender said NO WAY – owner can GIVE us the money. I said no way, it’s insurance fraud. By this time, I had nothing left, no hope of making good on back payments and the bank said to let it go to sheriffs sale.

        3. My friend bought the house back after the sheriffs sale, and was told he could get a rehab loan to repair the roof and ceilings, which he did. I do not own the house now, my friend does and I live with my friend.

        4. A year later, I get a letter from the insurance stating that since the check was never cashed they were either going to send to unclaimed funds dept or reissue the check. They reissued the check to me and the old lender.

        5. The repairs WERE made and I would love to pay back my friend who has bought the house and made the repairs that were supposed to have been paid by the insurance claim in the first place.

        Sorry if you seem to think I’m trying to profit from this! I’ve lost everything and this was the most embarrassing, humiliating time of my life. This was never a “dream” to be in this situation. Obviously, the insurance company has to do something with that money, they cannot absorb it back into their funds – its a paid claim and the money has to go somewhere.

  43. my morgage co is insisting they inspect the repairs done after irene.never in this whole tramatic event,where we lost all of my childrens photos and countless other important items did anyone tell us we should notify our morgage co.they should be notifyed by the had to beg and borrow from family and friends,if they are so concerned they could have fronted some money for repairs. this was a tramatic event over and over we are basicly accused of being dishonest and the bank dosent promise to give us the entire settelment check even though it is 5 grand short of what we paid for covered house is now rented so inspections are impossible,and i live 500 miles away.I hope people sue .

  44. Ricard,

    My name is Todd and I am a contractor in the DFW area in Texas. I stumbled upon your blog as I am struggling to collect money from a couple of different mortgage companies. It is not that I am not aware of the paperwork and certainly not that I haven’t provided it to them. The mortgage companies simply have inept people working for them in general. Most of them don’t have a clue on how to read an adjusters report that is basically simple math. I also have had them tell me with great attitude that they will send the money when they get good and ready to. I have always made it a point to remember that nice is free and you can catch more flies with honey than vinegar so I never show frustration with these folks. There is an enormous lack of intelligence, customer service and plain old common sense in most of these departments.

    I am pursuing a direct billing relationship with various insurance companies due to this. I am in Texas so things are a little different here.

    I saw the question asked ” How many people actually made off with the money before this was institued”? My answer is plenty! I actually have 3 jobs ( from hail storms ) where people were going to pocket the money until the check was made out to the mortgage company and the mortgage company forced them into repairs. I am in favor of the mortgage company being involved when not in a direct bill situation between the insurance company and the contractor. Why! many would ask just so you can make a living? That is part of the equation but also to ensure that we don’t ruin perfectly good neighborhoods and further complicate the housing problem that we currently have here in America.

    Lastly, people in the United States have to learn to live below their means. When we as a country can learn the difference between a want and a need and learn to pay for most things as we go this country will start to turn around!

  45. Pompton Lakes NJ – Irene took out the side of the foundation 3 feet of water upstairs lost everything.
    Finally got the insurance check 130,000. have not done anything yet to the house. We have Wells Fargo as our mortage and also Chase as the seconary my question is who signs off on the check . Oh and we have not paid the mortage since Sept cant affoed rent and mortage

    1. Good Luck!!! My mortgage comp. Indymac told me that in order to get any funds released to me I have to be current with my mortgage payments. My post explains what I’m dealing with, I made a reply to Robert’s post dated July 14. I too suffered damages from Hurricane Irene and live out in Jersey. It’s crazy because I agree with Robert so much, this def is a learning experience.

    2. Cindy – the biggest obstacle you’re facing is the fact that you are having to deal with the Loss Mitigation department as well as the escrow department. Now that your mortgage is approaching 90+ days delinquent you are going to find that your lender is going to be even more resistant to turn over any of the insurance proceeds to you.

      I have a question for you: You say you can’t pay for rent AND mortgage; Why isn’t your Homeowners Insurance paying for your housing?

      1. Hmm. My home was flooded on aug 28th due to Hurricane Irene, I had a contractor in to tear out and quote repairs. I had homeowners and flood ins. Fema came in and declared it a disaster area. I was given some FEMA money (1800) as my insurance company would not cover housing or contents. So I too had to rent a house for my son and I and still had to pay my mortgage. I was then told by the town (after tearing out floors and walls) that they were not issuing any building or re-building permits until after FEMA did this buyout thing. Now the town is trying to go through a FEMA buyout and it will probably take 12 months and I was asked to participate by the town, but I was also told that I still had to pay my mortgage. I have not paid my mortgage as per advice of a friend, plus I lost my job. So I gave up my rental, moved 3 hours away to move in with my elderly parents. I’m 44 and have a masters degree and now I have nothing and am facing forclosure and sitting on a 63K check I just finally received from my insurance company. I owe 107 on the house. What the heck am I doing? How can they sell my house when it’s in floodzone and there are no permits for rebuilding? It was worth 130 and now it has no floors or walls.
        Again, I’m confused and confused by your question about homeowners paying for housing. They came out to look at my house as well. Should I put a claim in with them? They said Flood insurance covered everything.

      2. Homeowners said that since this was a flood and that we have flood insurance that it is not there problem
        I spoke to Wells Fargo and they say that we are in active foreclouser and we owe 14,000.00 in back payments
        I asked them if they could just take the money out of the insurance and she said that they dont do that . It is probaly going to cost around 110,000 to fix the there is 20,000 left over. Do you think our best bet would to jsut let in go into forclouse we sure dont have 14,000.00 laying around. We met with a lawyer and he suggested sending the check back any doing in a leiu of deed. but also said that there is no guartnees that they will jsut accept the check

        1. Cindy – It sounds like you have already sought the advice of an attorney which is always a good first step! Regardless whether you are past due and in foreclosure, your mortgagee (Wells Fargo) has a moral and legal obligation not to impede the expedient repair of your home, however. You should not expect your lender to make the process easy or for them to release any of the excess funds to you if the job comes in under budget until your mortgage is paid current, including interest and fees. Alternatively, if you are unable to get current on your payments once your home has been fully restored and there is excess funds remaining from your claim you can expect your mortgagee to keep those funds and apply them to the past due money and fees that you owe.

  46. Well first off I am very discouraged reading the comments about Wells Fargo, they are my mortage company and I have a very serious claim. November 16, my home was hit by a EF-2 tornado which caused severe damage. Everything has been going wonderfully until we got the first checks today, over 50k for the house and 16k for the barn to start off with. Both of the checkswere made out to me, my wife, and Wells Fargo. Estimated cost of repairs is almost $90,000 on my home and $30,000 on my barn. I own the barn and the acre lot it is on so it is NOT on my Mortage. I have a excellent contractor who has already began working on my home and has worked closely with the adjuster since day one. Now we started dealing with the bank and I will say the experience hasn’t been pleasant or easy. We are doing everthing they asked for including copies of adjusters estimate, contract, and their eight pages of paperwork so I just hope it goes better. Now my question is with the barn NOT being on my mortage does Wells Fargo have a right to hold those funds? If not what do I have to do to get them released? I have had the same insurance for over 20 years and have never filed a claim, so this is all terrifyingly new to me, especially after reading some of these posts. I also live in North Carolina, but the checks have to be sent to Wells Fargo in California. I just want my home fixed and to get back in it as soon as possible, should I be prepared for disappointment?

    1. David – yours is an unusual one and that doesn’t bode well for you because as you’ve probably discovered giant behemoth banks like Wells Fargo don’t think outside the box and don’t do unusual very well.

      Now I am not an attorney and I would advise you to seek counsel from your attorney before taking any action based on my advice alone but as I see it, if your barn is on another parcel/legal description and the mortgage you have given your bank is for your residence which is located on a separate parcel then your mortgagee has no legal interest in the barn and thus has no say in how, when, in what fashion or if ever you repair your barn.

      I suggest you speak with your insurance agent and see if they can separate the payment of the claims. Even though you have only one policy it should be able to be done. Your agent may want proof that you own the barn free of any encumbrances, a title search from your local title company, land abstract or real estate closing attorney ought to suffice and the cost minimal; less than $100.
      Thanks for the great questions and please do check back and let me know how it is resolved because you have piqued my curiosity!

  47. I just couldn’t go away your web site before suggesting that I extremely loved the standard info a person supply on your visitors? Is gonna be again continuously to check out new posts

  48. I recently had some water damage in my home due to a broken pipe under the foundation. The damages just exceeded $10,000. The pluming has been repaired but now the floors, baseboards, drywall etcetera all need to be replaced. My mortgage company is now holding my check and will only release it to a contractor. I got in a tight spot and filed some papers with loss mitigations a few months back but I have now been making them on time payments. They are telling me I can’t do the work on my own now due to the fact it is with loss mitigations. I do not understand why I can not do the work myself, have it inspected by my lender and use the remainder of the money to catch up all the way on my mortgage. This seems like it would make the most since for everyone???

    1. Josh In a perfect world your logic would make perfect sense, but then again in a perfect world your loan would be current ant not in the loss mitigation department. Unless you have ever worn a gigantic bulls-eye on your back, with hundred dollar bills literally falling off of you while lumbering ever so slowly through the worst neighborhood that you can imagine then it is probably very difficult for you or anyone else to glean what a great big lumbering liability your mortgage loan and lender is right now. Now more than ever because of our current political climate people see dollar opportunity when they think of their bank and namely how can I get some from them!

      Because your loan isn’t performing as agreed it’s causing your bank HUGE headaches and depending how many payments down you are it might be impacting their tier rated capital (if they are a bank) which means they have a lot of motivation to help you get current or at least not get further behind even if it doesn’t feel that way to you.

      But here’s where it gets tricky; If your bank lets you act as your contractor even though you are the owner you have this great big motivation to cut costs and yes potentially corners too because you know in the back of your mind that if you can shave a little here and a little there, then maybe you can get caught up on your mortgage and that great! Right?

      Sure, until something goes wrong and maybe it never will but because I don’t know the laws in your state please just take this as a hypothetical. Let’s say you go to sell your house 5 years from now and your agent asks you to complete a property disclosure report, and let’s also say for hypothetical reasons that your state requires you to disclose the water damage because it was in excess of say $5,000. now let’s also say that the market value of your home has been substantially diminished because you can’t provide a certificate of completion from a certified disaster recovery company who warrants that the home has been returned to it’s pre-disaster state and the person who has bought your home at a discounted price can’t obtain homeowners insurance on the property (which incidentally occurs almost always the day of or two days at best before the scheduled closing) and cannot or will not close because of this.

      I’m guessing that any attorney who is worth the paper that their license to practice is printed upon will be able to put together a pretty convincing argument as to why it is the banks fault and not your own why your cannot sell your home and why that asset has been significantly diminished.

      Of course I’m not saying any of this would come to pass or that you would do any of what I talked about hypothetically but don’t think for a moment that their isn’t a bean counter deep withing the bowels of a bank towers basement in New York getting a very nice salary to think about and measure the what-if risks like we just discussed.

      I know it wasn’t the answer that you were looking for but I hope it helps you to better understand the why not and that you appreciate the time that I have taken to explain it to you because I am certain that your bank did not!

      My advice – hire a professional Restoration expert company who can give you a certificate of completion that you can present to your future purchaser when that time comes. The insurance paid for you to have the best possible repairs, it is your home, why not get the best repairs and focus on whatever it is that you do for a living so that you can get to a better place financially?

  49. I had some water damage in my house so the ins pay me 20,000 nut it has my name and the mortgage name I want to know how to cash it with out them cause I call them they want to hold it and send me just a 3 rd of it how do I do this

  50. Tiffany

    My Father’s words come to mind: “It never hurts to ask… the worst they can say is no.” The outcome to your request, however, is dependent on the financial institution that you are engaged with. We personally have never seen the lender bypass the homeowner but, to our knowledge, we have never had anyone ask either. As a Restoration Contractor we are always fans of anything that speeds along what can be a very long waiting process for payment.

  51. I filed a claim for damage to my home and received over $10K in a form of a check made out to me and the bank that owns my mortgage. I’m a couple of payments away from paying off my mortgage, what would happen if I send in the mortgage balance now? Will the lender still follow the rugulations for checks over $10k if I go next week to try and cash it? The loan would be paid off then.

    1. Vanessa As you may have guessed by my prior replies, I am neither an attorney nor a licensed insurance agent. Alas I am only a mortgage loan officer! However that being said, yours is a very unique circumstance that most people would love to find themselves in, a home that is 99% paid for; Congratiulations on your diciplined fiscal responsibilities! If only more Americans had shared your values then perhaps we might not find ourselves where mortgages are being offered to people at prime rates whose homes are mortgaged in some cases in excess of 125% or more than what they are actually worth! (Home Affordable Refinance Program (HARP)). Let’s get back to your question lest I digress!

      Because you owe so little I would reccomend that you pay off your mortgage and then have the insurance company issue a new check to just you and any other deeded owners. Beware In order to make sure that you don’t cause yourself more delays make sure that you follow your lenders payoff instructions to the letter. In other words, DON’T send them a normal payment like you would any other payment because this will likely cause delay and might not result in the mortgage being returned.

      Here are a few tips to consider;

      1) Ask your lender for the FASTEST way for you to send them your payoff. This will require that you call your lender and request a written payoff statement with their instructions on how they prefer to receive those funds. In all cases they require CERTIFIED FUNDS. My advice is that you follow their bank wiring instructions because I assure you is the on way your lenders preference to receive payoff’s.

      2) Ask your lender for a expedited means of receiving their release of lien which sometimes is referred to as discharge of mortgage. This may very well be the original mortgage that you gave them when you borrowed their money stamped PAID or CANCELLED either way this will be required in order to prove to your insurance agent that you have in fact paid off your mortgage. I suspect this all could take about a week if you provide them with a prepaid FedEx label but it could well be worth it to avoid the potential pain of dealing with your lenders escrow department,

      PS – when you get that mortgage back, make sure and have a mortgage burning party with any young folks you know to prove to them that it can be done!

  52. I had to file a homeowners claim due to damage incurred after a natural disaster. Everything has been approved and the insurance company is ready to cut my check which is over $10,000 and so has to be made out to myself and the mortgage company. Almost half of that money goes to the restoration company whose work is already complete so the and payment is included in the check they are about to send. I have read so many horrible stories about having to deal with the mortgage holder in getting repairs done in situations such as this where the check was over a certain amount. If the insurance company pays the restoration company directly then the remainder would be less than the $10,000 limit and I could get a check with just my name. Can I request that they pay them directly and would they have any reason to decline since their work has already been done and these are monies owed? Are they obligated in any way to oblige my request?

  53. First of all thank you for your help in understanding this. While the mortgage company is holding this money I assume that they are earning interest on this. Since the check was made out to me and the mortgage company, do I have a right to have of the interest earned?

    1. Tammy Great question and you are most welcome!

      Because the money is yours and does not belong to the mortgage company, and because they are holding it to disburse on your behalf, normal escrow rules apply. The Federal Trade Commission is very clear on this issue. The bank is not allowed to earn any interest on escrow impounded funds whether it is held for the purpose of paying your taxes, insurance or in this case for your repairs. While I know that it may not seem so from all of the previous comments, I am certain the bank does’t want to hold your money any longer than is absolutely necessary because, well they aren’t benefiting from it.

      Please check back and let me and my readers know how things have turned out for you and share any tips you might have uncovered along the way.

  54. i have a $50,000 check for storm damage for my property that forclosured. The check is in my name and the mortgage company. Do i have any rights to any of the funds in the check?

    1. Rod In case you’re wondering, your answer will be the same as the previous answer to “Unsure” whose mortgagee chose to charge off the loan without foreclosing the property.

      Sure, you have rights but those rights are limited only to making sure that your property is repaired to its pre-catastrophe condition. Like in the case of “Unsure” if the repairs are completed under budget the additional money will not be refunded to you because you have defaulted the mortgage by not making your agreed upon payments.

      If any money remains, it will be applied to your unpaid interest and principal and then to fees to bring the loan current. Because it is in everyone’s interest that the property be preserved and restored, you should be diligent to work with your lender to protect their interest as well as yours because a distressed property will be sold at a sheriff’s sale for at least 20% under market value. One that has extensive damages like yours will be liquidated to investor paying cash and that could go for 50% or more and that just hurts you in the long run. If you don’t work with your lender they eventually will get a check without your name on it when they take ownership through the law.

  55. What happens if your Mortgage was Charged off and you have an insurance claim. The Mortgage Company walked away from the Home (it’s completely underwater and not worth even foreclosing on) .. You get an insurance check with both of your names to repair the roof. What then ?

    1. Unsure – Yours is a unique situation for sure because the fact that your mortgage company charged off the debt without foreclosing on your home really underscores that your home is in fact likely worth less than what is owed on it.

      However the act of charging off the debt in no way diminishs either your mortgagee’s lien interest in your home or your obiligation to repay it. The act of “charging off” the debt is an accounting and tax law requirement and according to generally accepted accounting principles occurs anywhere from 90 to 180 days without payments from you the debtor. The lender declares it a bad debt and writes the loss off against their profit & loss statement. Hence the term “Charge-Off”.

      When the lender collects, and they will, because remember they still have a mortgage lien against your proerprty which still has some value, albeit not as much as it once had or what is presently owed, then they will likely be exmpt from paying federal tax on the amount collected because it is money recovered from a previously charged off debt. But I am sure you really didn’t care to learn all that. You want to know what to do about your roof and this check made out to you and your mortgage company who probably won’t be excited to help you cash seeing as you owe them a ton of money and obviously haven’t been paying them.

      So here’s the bottom line; Your Mortgagee still has an obligation to assist you to repair your home by cashing the check regardless if you have defaulted your loan or not. Afterall they only have a security interest in your home, you are are the rightful and legal owner and they cannot stand in the way from you restoring your home to its pre-disaster condition.

      However Once the insured damages are repaired, if any excess money remains once the contractors have been paid in full, they are entitled to keep what remains in order to satisfy your indebtedness to them. I’m sure you can see how this is only fair, right?

      PS – One last thought – just in case you were thinking that you might act as your own contractors and make the repairs yourself, DON’T EVEN THINK ABOUT IT! Even if you are a licensed contractor under these circumstances there is no way in Hades that your lender will turn over even a thin dime to you .

  56. My mom had an electrical fire and has been out of her home for a month because the insurance company took so long mailing the check. The insurance cut her a check for $5000. The check is made out to my mom, her husband and the mortgage company. A friend said that if my mom sends the check to the mortgage company, and she is behind on her payments, they will take all of the money she is behind out of the check. She thinks she is behind $5000 or more. How can he get the house fixed if the mortgage company takes all of the money? Is there anyway the adjuster can make the check out to my mom, her husband, and the electrician’s company? What can be done here. Thank you so very much. my mother is almost to tears because the pool is green since the power is off and the pump is off, the fire shorted out the computer, the AC now has mold in the vents, they want the house fixed and the power on so they can see the damage it has done.

    1. Jay

      Frequently I will tell people considering mortgage advice from amateurs although I know how to change a tire, and have changed perhaps 8 tires in my life, the most recent perhaps three years ago, this doesn’t qualify me to be on Pit Row at Bristol tonight! The same can be said for anyone giving mortgage advice based solely on their experience that is limited to their role as a borrower of a mortgage.

      That said it sounds like your mother has a lot of things happening at once and you are a good son to step in to help. Le t me also qualify my advice by making it clear that I am just a mortgage guy and not an insurance adjuster or attorney, and state laws indeed vary.

      First; Because her lender has a legal interest in the there is no way that I know without committing fraud that her lenders name can be removed from the insurance claims check. That legal interest is described in the mortgage/deed of trust that she gave the lender when she borrowed their money. That document was recorded at the county in order to evidence their interest.

      Your mother’s friend is only partially correct. Generally speaking if your mother has a conventional or FHA insured mortgage loan and those payments are arrears, then in some cases the mortgage company may keep any NET proceeds from the insurance claim.

      Let me be clear, the mortgage lender first has an obligation to your mother, the rightful property owner to release funds FIRST to pay for legitimate and completed work and only after the work has been returned to its pre-disaster condition can they consider keeping any portion thereof in order to satisfy the arrearages.

      The insurance company also has a responsibility to restore the home to the pre-disaster condition. That being said your mother also has a responsibility to take steps to protect her property from further damage. For example if there is a hole in the roof then she should cover it with a tarp to prevent further exposure to the elements and thus further damage.

      I am concerned primarily about the mold, this is serious and she should document that she hasn’t delayed the repairs thus causing more damages. I have asked my friends Jonathan Atkins from Restoration Experts and Don Fuller with North Carolina Farm Bureau to weigh in with some advice from their perspective too so please check back soon.

      Has your mother contacted her mortgage lender to get their instructions for processing that check?

      1. Thank you so very much for that information. I understand that you cannot with 100% certain advise me on this matter, but what you have told me is very helpful. I told her about the mold but I do not think she fully understands how dangerous it is. But I will make it more clear to her. I think that should be the first priority when everything gets fixed rather than the pool and computer.

        She has not contacted the mortgage company yet because she just got the check and has to wait until the weekend when she does not work, but I told her the first thing she should do is call them to see what the process is. Thank you so much for answering me back so fast and I will definitely check back soon to see if your friend has anything more to add. Thank you very much!!!!

  57. If their are monies leftover after all repairs have been completed,where does it go?

    1. Patrick – if the repairs to your home have come in under budget and your home is now restored to it’s pre-disaster state and you are satisfied that the work is done correctly, congratulations!

      You may want to check with your insurance agent to be sure but in most cases the money is yours to keep. However if you are arrears in your mortgage payments and your mortgagee has been named in that check they may keep it to satisfy the arrears.

  58. I definitely feel they are acting inappropriately but I can’t prove it is unethical or unlawful since according to law they have the right to be on any check over $7500.00.

    I think reporting them is okay but as you mentioned even if they get sued or fined it is not going to make a big enough difference to keep them from doing it again. It also won’t get you fast results. Government agencies can take years and years to investigate a civil matter like this.

    I think we are mostly on our own to get things done as fast as possible for the moment. If they delay too long get an attorney involved.

    1. Robert you have inspired me to post here and ask questions….thank you.

      I live in NJ, suffered damages from Hurricane Irene (8/27/11). I have a 2 family home since then lost my tenant and it has been very difficult to make mortgage payments. I called my mortgage company and explained that the house is not livable for myself and tenant, and would not be able to make payment. I asked if there was anyway I could be assisted and/or if I can have my mortgage payments stopped until I made repairs. Indymac mortgage told me the only thing they can do to help me is waive late payment fees and not report me to the credit bureau for one month only. That being said I had to make sure that my mortgage payments were made and repairs done out of my pocket, just to speedy things up. Now fast toward to now, here we are in the month of December, I received my insurance claim check made out to me and my mortgage company. Indymac explained that since I started repairs and began to pay for it, I should just act as my own general contractor. I submitted all the forms they need: adjustors worksheets, intent to act as general contractor and endorsed check, last week. This week I have had to call them everyday just to request my first 1/3 and inspection for 2/3 part of my settlement check. Now here is my problem everything takes 3-5 business days, to review documents, to make a request for first 1/3 release of check, request inspection, to hear back form an inspector to set up an appt, appt alone is not next day, report from inspector, request for second 1/3 of check…..once I start to had up all th 3-5 business days, I’m looking at 2 months of waiting for everything to be complete, maybe even longer. How can I get this rushed I just need to finish my repairs and rent out by Jan(if I’m lucky enough to find a tenant) and pay my cash advances and Home Depot and Lowe’s credit cards before the interest rates start killing me. I explained everything to all the reps that I have spoken to and even asked to speak to supervisors but apparently no one can help me and they have to follow protocol. I asked for corporates number they don’t have it. I try to be very civil and respectful. I don’t curse and try not to get angry. But I need to know how can I rush this process? I don’t know who to ask for? I’ve called Mon, Tue, Wed, today and will call tomorrow and everyday if I have too. But all I get is “I’m sorry there is nothing more i can do it takes 3-5 business days”.I’m just so worried because all these business days and holidays are coming up so that means more delays and people taking ext ra days off and that’s not including the days lost because of weekends. Help!!!! PS since I’ve been calling all these days, have spoken to some of the same reps over and over again, without asking for them, they just answer the phones. And if I ask to speak to higher management other than their “supervisors” all they say is they can only be contacted through international emails and they don’t have direct phone numbers or ext, and get this I’ll get a call 3-5 business days.

      1. Sorry…made the post from my phone meant internal emails…meaning they can’t give me the email address.

      2. Lola – First let me take a deep breath in and let it out slowly because WOW!; you have a lot of moving parts to your situation. OK – let’s talk about your rental situation; because you have a two (2) family home and rely on the rent to cover a large portion of the mortgage payment please tell me that you have a rider that includes loss of rent? If you do, youy should be able to claim loss of rent from your insurance company.

        Next, because your lender is IndyMac Bank, you have an additional problem; they have been controlled byt the Office of the Thrift since their failure in 2008 and no viable buyer could be found to absorb their losses. Therefore you have the government oversight with adds to what you can see is already a heavy paper4work burdened process.

        NEVER, I repeat, NEVER take a verbal agreement from your mortgagee to allow you to skip a mortgage payment. Your Agreement is spelled out quite clearly and this is the document they will use when they take you to court in foreclosure proceedings and unless you have documentation they and you agreed to something else, you WILL lose your home in foreclosure.

        I know times are tough and we are all scraping just to get by and not fall behind, trust me, I’ve seen my earning ability cut literally in half because Congress feels I don’t deserve to make a measly 1 1/2 percent commission for negotiating and advising clients on the most complex transaction a consumer will ever engage in!

        That said, my advice; It’s time for you to hire a lawyer! Sure it will cost around $100 but nothing will get your lenders attention faster than a demand letter from a lawyer.

  59. It’d be easier to separate you from Wells Fargo if at any time you did something other than stand up for their rights. At your request I typed a pretty lengthy post stating what I believed was wrong and what should be changed. I am left to believe that by not replying you disagree that there is anything wrong with the process.

    1) So it is okay to give the homeowner little to no information on how to best handle the disaster or how to speed up getting money released.

    2) Even though I proved that I paid for temporary repairs to the adjuster it is ok that those monies are also withheld.

    3) It is fine if the MC can indirectly profit from our insurance money giving them motivation to take their sweet time giving it back out.

    4) It is fine to treat proven responsible people as untrustworthy.

    5) Pretty much the same as 4 but with more proof or responsible actions.

    6) It is fine to force disaster victims to hire lawyers as their only recourse.

    And now we find out that even thought Wells Fargo is doing this to protect their interests it is fine that the only person they are protecting themselves against is me. All of the battles are mine to fight alone and I suppose it must be fine that I get to fight them with depleted bank accounts.

    I am sorry if towing the company line was particularly insulting to you but if you don’t see any room for reform and you defend the process how else am I supposed to perceive it? You are saying the very things Wells Fargo has said to me in many conversations.

    You have taken great offense at standing up for your industry and their practices but it is okay for Wells Fargo to call me untrustworthy, right? By defending their rights to protect themselves from me you are calling me untrustworthy too. Which is worse? Standing up for your industry or being called a liar and a cheat.

    1. Once again the silence is deafening so I am left to believe you just want to string me along to make your blog more popular/searchable. A disaster victim getting used by a mortgage person is all the rage these days.

      I know this will be like one of my other posts that conveniently doesn’t get approved but the only way I stick around is if you stay in the conversation. You might get someone else to pick up my slack but then again it did take you 2 months to get your first reply.

      You have your agenda (sells) to promote and I have mine (reform). I can debate a topic for a very long time but not by myself. So either cowboy up and get back out there and respond to my points for improvement or by Tuesday I will forget this site ever existed.

      1. Robert I get it that you are angry and that you want results and frankly to some extent you have a right to feel the way that you do but again I am amazed that you are taking it out on me given that I did not originate your mortgage and I do not work for Wells Fargo Home Mortgage (although I did briefly in the last decade and it was the worse experience of life).

        A common theme among the complaints here tend to be with the 5 largest lenders. Wells Fargo Home Mortgage happens to be the second largest mortgage servicer in the world, with 1.8 Trillion Dollars worth of residential mortgages, they are second only to Bank of America’s $2T.

        If you think “reform” by the use of the law is going to improve your experience by all means go for it. But before spending all that time and treasure on an endeavor that will likely net you very little satisfaction you should first try using some guerrilla tactics that are nearly free.

        First Don’t underestimate the power of social media! Continue to name and shame your lender until they respond. You will be amazed at how fast you can get the attention by your banks PR department if you post very specific examples of your complaint in on-line forums like this one.

        Here’s the key – drop the rhetoric and stick to the facts otherwise it makes you sound unreasonable and will you will garner zero support from anyone in the PR department.

        Next hit Twitter with your complaints being sure to link back to your post and ask your followers to ReTweet it. Trust me, I know this sounds silly but it is true. Every bank with a marketing and PR department in the country trolls the Twitterverse looking for their names and customer issues. When they find legitimate complaints they are very good about resolving issues internally in a way that tends to be prompt and efficient.

        Final thought Avoid using abbreviations for the lender because they wont show up in their search engine alerts so make sure to use the lenders full name in your complaint.

  60. So, I called Wells Fargo today to tell them that the insurance company was only willing to pay me to patch my front wall and that there is no way the bricks would match thus leaving my home devalued. I asked them if they wanted to help me go to battle with State Farm and they declined. I thought they were doing all of this to protect their interests in the property? They can’t even be bothered to write a letter?

    So once again it is confirmed that they are only doing this to protect themselves from me and even though they are putting the hurt on me financially they expect me to have the resources to fight to get the house back the way it was before on my own.

    I have always said that death brings out the best in some and the worst in others. I now add disaster to that saying. There were volunteers and looters, as well as, companies willing to donate and companies that kick you when you are down.

    1. Robert, that is unbelievable that they would mismatch brick on the FRONT of the house and determine that the house has not lost value in doing so. Behold Wells Fargo ….your home!!!! If you ever sell that will be a negative against the property when appraisal is done. But WF doesn’t care. Give em the check, pay your mortgage and give em the balance of what you owe on it if you sell at a loss! If this keeps up there will be many foreclosed properties for the bank to fix up at THEIR expense. Right now it is better to rent!

      1. I have full replacement insurance so if I had a wall that matched before I should have a wall that matches when all is said and done. My RC expert seems to think we can get State Farm to pay but it is not certain. What is certain is that Wells Fargo will do nothing to assist me even though they claim to be doing all of this to protect their interests in the property.

        Ricardo, what are your thoughts? You seem to be pretty silent as of late.

        1. Robert The reason I haven’t commented much of late is because I have enjoyed the discussion and I didnt feel that I could offer much to enhance the dialogue. And when I have commented the responses have been cynical at best and down right rude at their worst.

          Because you asked, I agree with you that your insurance company should pay to have the brick matched exactly in order to restore your home to it’s pre-disaster condition. Unless you had mismatched brick prior to the loss, then I would agree wholly with you that this is not going to work. And I also agree that it does affect the value of your home because surely when you sell your home it will be obvious to the buyers as well and will likely cause you to have discount your home in order to remain competitive.

          However…..and like I said earlier, I don’t work for any of the companies mentioned above so I don’t want to hear any rhetoric about towing their company line or carrying their water…I think your anger is misdirected. Wells as an interested insured party has a fiduciary responsibility to make sure the work is done before releasing the money. As the owner it is your repsonsibiluty to make sure that it is done right after all you are the owner and you know the condition of your home prior to the edate of loss.

  61. Here’s another way to look at the BIG Picture…. We as homeowners are renting to own with tax priviledges… They, the banks and MC, want us to THINK we own. Until that 30 year or 25 year seesaw shifts to you being the owner (i.e. paying off the house) they are the TRUE owners. But in this case you MUST have Renters insurance (i.e Homeowners Insurance) It is the ILLUSION of owning that we have that makes this a bitter pill. But the insult is, with all the changes in the Banking and mortgage industry, you and I must have UPFRONT money to start the process of rebuilding and then once you and I start then they will release THEIR claim money for THEIR property THEY still own. SORRY….. I think it is covert system of control and its unfair becasue the circumstances of each individual are different and may not lend itself to them being able to UPFRONT the costs. In addition, I have a contractor who is hired out on 12 insurance projects and is having problem making payroll because the MC are so slow about reimbursement. It’s funny though how we, the HO and the contrctors are expected to do so much with OUR FUNDS on property that isn’t ours.

  62. We, the homeowner pick the insurance company, we pay the insurance company, and pay our mortgage too. I was a realtor and I always told people they were better to buy a home than rent, well after this I change my mind. We are retired and we have over $25,000 in wind damage to our home garage and barn and the mortgage company wants half the first check which is $12,000 and the second mortgage wants half, how do they expect us to get the home repaired.
    I soloution, let the bank have it back, file bankruptcy and go on with what life we have left.

    1. Pat, I can’t do what you are considering but I understand it. The restoration process is a major hassle without the MC making it worse. I am quickly approaching the 3 month anniversary of the tornado striking my home with no end in sight. The constant disruptions, noise, uncertaintity of if the insurance company will cover everything, the major drain on our finances, loss work time, dealing with the contractor, and fighting with the MC is all taking its toll on us.

      Being treated as untrustworthy by our MC while we are suffering through trying to do the right thing is intolerable.

      The thing is right now this is the MCs’ dirty little secret. When this is all over, if I have my way, I will put together a place for victims to learn from each other and coordinate. We need to give our mortgage business to institutions that pay out the insurance checks right away and there are some that do. We need to be writing letters and talking to news outlets

      1. Robert – You took the words from my brain!

        While moderating this discussion it occurred to me today that you guys should share with the readers the name of the Mortgage Companies who you are having trouble with and include phone and fax numbers and any tips because although there are only a few who have commented this has been read more than a 1,100 times since posting May 17th!

        I am building a form to submit the information. Look for it very soon.

  63. Also, after reading teh long string of complaints across the US about my MC, I feel a policy change is needed to protect the homeowner as well. There should be an immediate 33.3% draw upon receiving the claim check and adjusters statement. All other accompanying documents CAN BE sent later but to start work towards rebuilding this should be automatic. No questions asked. Before the next draw, all documents should be received such as w9, waiver of lien documents, contractor estimate, etc. The homeowner is expected to be financially able to handle things UNTIL funds are released and the truth is if we were able to do all this would we really file a claim? The MC don’t have a full picture of the homeowners situation and the homeowners are not aware of the MC concerns but the bottom line is there balances are tipped toward the MC and thats not good business. If future homeowners begin to realize these situations, they may determine that it is better to leave the damaged property to the MC to fix and abandon it never filing a claim. The process to restoration is too cumbersome. The upfront expenses they have to assume may be more than the family can financially handle and decide that in the bend they may still loose the home if they can’t make mortgage payments and upfront repairs. This is really sad……. I’ve read several posts where this was contemplated.

  64. I have followed the string here and I agree that the MC doeshave a right to make sure work is done to property they still own. The transfer of ownership for most of us is over a 30 year period. I too, am in the same situation, or at least I hope not. I had a restoration comnpany hired but fired them because they were using the cheapest quality of material possible to maximize their profit margin above the customary 10%. DId i mention they also charge a 10% overhead to my insurance as well. Long story short, they tiled over linoleum and charged ins that it was removed, they removed custom cut plywood substrates for counters and put in cheaper than mdf substrates for counters. Then hire a shade tree worker to piece meal it together on the backsplash and counter like a kindergartener. Seams were everywhere. I subcontracted the remaining work to licensed and bonded professionals (paint, flooring, plumbing and electrical, and counters) I paid out of pocket to have home depot install granite counters and lumber liquidators for flooring. I overnighted all documents reuqired including verifiable receipts and claim check,etc. I have 7.00 to my name and my MC claims they will review my documents to SEE IF I can be reimbursed out of the claim. I then asked in writing for a 50% draw and an immediate 50% inspection. The floors are in tonight, plumbing is complete, counters are templated this week. Any thoughts on what I should do if my MC, second largest bank and mortgage lender in US, decides to not reimburse me and I can’t make next months mortgage payments because my contractors need money?

    1. LJ, a couple of things. Did you forward a copy of the contract you had with the restoration company to your MC? If so, the restoration company may have included language to have the checks made out only to them. You need to make sure your MC understands completely the RC has been fired and you are self-contracting. My MC has a bad habit of losing things and getting things wrong so it would be best if you sent them a contract to get a supervisor on the phone.

      Secondly, as I eluded, you need to fill out the self-contracting forms which entitles you to a draw. Be warned though you may be looking at a couple of weeks at least before you see any money. If you are really that hard-up for cash I would be calling them everyday and asking to speak to a supervisor.

      Don’t let them treat you as though you are stupid. I think they get used to people who will just follow the normal arbitrary rules because they believe they have no other choice. Don’t be one of them. There are ways to cut through the BS you just need to work them over until they give you one. If need be threaten to hire an attorney.

      1. Thanks Robert,

        The RC has not sent their information in as of yet. It may be because I have NOT signed theri check. They received a check separate from mine. I lkivce in Ga and I am prepared to begin a class action lawsuit against my MC if they jerk me around. I have sent everything neatky typed and and labeled. There was an envelope within an nenvelope to separate my presonal expenses. In spite all the detail they had the audacity to tell me this morning, I need to resubmit W9 for my contractor, add up the totals for them on the estimate because there were two totals ( one for paint and one for flooring) clearly marked. I had to ask if they ewere capable of dfoing that but nonetheless I refaxed the estimate with totals and TYPED IT out word ofr word so they could read it. I don’t want that to be the next point of contention. Here’s the deal guys, they apparantly are TRAINED to hold up and stall for financial gain. They are asked to look for ANYTHING they can find that is wrong or could be BETTER PRESENTED. It is ABUSE to the homeowners because we have no choice in the deal anymore. The state attorney general is where to begin I’m told. And yes I too am with Wells Fargo!

      2. I just called them for the self contracting forms. Dustin said it takes about two days to get them faxed. I don’t understadn why they didn’t tell me about the forms since I sent them $3812.00 receipt for flooring and $2404.00 for counters. IT is obvious these sharks are out to kill.

  65. 1) The packet from the MC did nothing to educate me on what I should be doing. If the MC were truly interesting in protecting their interests they should have made mention that we needed a restoration company not just a contractor and provide some general guidelines for making the selection. They should also make sure that the homeowner is aware of the consequences of failing to make repairs. In addition the homeowner should be informed of all possible exceptions like self-contracting and whatever else gets the money out faster to see if they qualify.

    2) The MC should have *NO* rights to money that has already been spent between the time of disaster and the time the adjuster has done his work-up. All temporary and permanent repairs as well as clean-up should be in a check made out to the homeowners only. That alone would have eased my financial burden by over $8,000.

    3) The MC should be legally bound to deposit the money in a third party financial institution and any interest made be given to the homeowner. There should be zero opportunity for the MC to make money and be motivated to create delays.

    4) Assuming the homeowner has signed a document stating they understand their responsibilities and the consequences if they fail to meet their obligation and the homeowner is not only current but has a good history of paying their mortgage on time the first third or whatever the homeowner has already paid (in my case it would have been half) should be released within 3 business days.

    Once the homeowner reaches the 50 percent mark and it is clear that he or she is committed to the project the rest of the money should be released.

    6) If the MC is in the insurance check business they should be governed by the state insurance commissioner so that victims can report abuse, the process is regulated, and MCs are occasionally audited. The MC should be forced to do things in days not in weeks.

    All of this assumes that the homeowner had no chance of being the cause of the disaster (fire, leaving the sink running, etc). In those cases where there is a chance it is deliberate I will agree the MC should be very careful. There is not much chance I created a tornado in my mad scientist lab to hit my home.

  66. While I appreciate having discovered this forum, it would appear, in many instances cited, our expert is playing “Blame the Victim.” In our instance, we did NOT choose our MC. Our loan was with another Mortgage Lender, and within weeks of closing we received a letter that said our Loan had been bought by another MC, one out-of-state, and our payments would now go to them. Not our choice. Nothing we expected. Like most folks, in this economy, our MC will only release half the funds. We’re upgrading our house, increasing the value greatly, with 50 year steel roofing, which costs us 30% out-of-pocket. By refusing to release more than half the monies due to us, we can’t even buy the materials. Should we have a cushion of monies for emergencies. Yes, shouldn’t we all? Those monies have just been invested back to restarting our business. The MC does not make the payments on our insurance, they do not own this house, they do not have to fight with the HOA on variances, and I feel quite sure they won’t be sending anyone down from Michigan to Texas to help us re-roof the house in 102 degree heat. As I said, thanks for your forum; but you might want to soften the attitude just a tad about how stupid we homeowners are, and how we made poor choices. It reeks just slightly of blaming a woman for getting raped, because of what she was wearing. And in case you haven’t noticed, in the past few years, Mortgage Lenders have certainly engaged in some questionable practices. Ask any of the thousands of people who have been foreclosed on. I know of very few people, especially those of us on Social Security, who have thousands of dollars stashed back for such an emergency.

    1. Joyce, you and countless others like you are the reason why I keep harping on this.

      If the MC informs us we are responsible for making the repairs, we sign a letter of agreement that we intend to make the repairs or face the consequences and we are current on our mortgage shouldn’t that be all they need to release our money? I don’t get why a victim of a disaster is treated like a potential criminal.

      I asked my MC if I could just send before and progress photos to show work was being done and they insisted on sending out an inspector. The entire process to prove I was at the 50 percent mark of work completed delayed getting my second third by 3 more weeks. I am so untrustworthy they can’t even accept work in progress pictures?

      1. Robert Because I don’t work for your mortgage company and have no dog in this fight (reference the company-line jab) why dont you instead of harping on me take a more pragmatic tone to this discussion?

        Perhaps there is a better way
        Please tell me and my thousands of readers who have and will read this thread how you would handle this differently if you were the lender and not the debtor and how that would better protect the lender and their fiduciary duties to their investors and borrowers while making the process better for you?

  67. Karl S : I agree they have a right to protect their interest, but I suspect this may often be excessively leveraged.

    Who are they protecting their interests from? Me? The same homeowner they gave a low interest loan to 9 years ago who has never made a late payment? Why are they calling me untrustworthy now? Would it have anything to do with the potentially millions of dollars they can hold on to and make interest off of while they make sure that people like me are making repairs?

    There is nothing in my past or my credit score that would indicate I am anything but a trustworthy person, they know that, and yet do not care.

  68. It would seem to me that they would only have the right to withhold their proportionate share of the total interest; that is, if I only owe 20% of the value of the home then they should only have the right to control that portion. That is how it would work with multiple owners, or titleholders. More particularly, if the insurance settlement exceeds the value of the loan, then how can they have a right to more than their interest? I agree they have a right to protect their interest, but I suspect this may often be excessively leveraged.

  69. Actually there is one more thing and it is very important to me since I still don’t know. What are MY rights in this situation? Are there time limits to how long the MC can “reasonably” hold the money? What if the primary lienholder decides to pocket the money themselves? What if they demand that all repairs be made before any of the money is released? Are there rules they absolutely must follow, if so, what are they? If they don’t comply to the rules is there an oversight body to which they can be reported?

    1. Robert Your rights are probably best interpreted by your local state laws so I can’t advise you of your rights. However speaking purely from my personal experience, most state banking and insurance commissioners supervise both commercial transactions you are dealing with, a claims that has taken an unreasonable amount of time and a mortgage lender who in your opinion is also taking too long to process the claims check. It would seem to me that would be the best place to start.

      Typically there is a process for filing complaints that can be completed online. When a lender or insurance company receives a notice from either of these agencies, they drop everything at once and work to resolve the complaint to the customers satisfactions post haste because these are the same agencies who typically issue their licenses to do business in that state!

  70. Ok, fair enough. So I am not supposed to tear down my home and build something smaller.

    However, I can and did add a sunroom to my home. Was I supposed to call my MC and inform them, and let them inspect the progress and the completion and if not, why not? Shouldn’t I have to send them the money in advance and let them give it back to me in installments to make sure I don’t spend it on something else and fail to complete the project, again, if not, why not? What is the difference between that and being hit by a tornado? Any unfinished construction project could potentially leave the home devalued.

    We all agree that protecting the home from further damage is in everyone’s best interest. What happens if the homeowner can’t afford all that is needed? Even if the majority of the check should be given to the MC isn’t it everyone’s best interest to get a third to the homeowner right away? It is obvious that delaying the first installment increases the chance of further damage as witnessed by my neighbor.

    Lastly, I pay for insurance to protect me. If the MC is afraid that a certain percentage of people will run off with the insurance check and go for a big vacation shouldn’t the MC carry insurance to protect itself from those situations? It would certainly be pennies compared to what the homeowner carries because it would only pay in those particular cases.

    1. Robert It sounds to me like you are struggling with the authority that your mortgage lender has over you and I think I could stop right here but I suspect that answer wouldn’t be good enough for you so let me spell it out for you so that you can appreciate the why’s.

      In order for you to appreciate the WHY’s you first need to understand that lending is ALL about measuring RISK. Even the best credit risks still pose a risk to the lender and if we as a people have learned anything of late is that ALL real estate transactions involves risk. Risk to the buyer that the value may decline [and the same risk to the lender], risk to the lender that once that house loses value that a buyer with otherwise good credit and means may decide they no longer care to repay the loan and walk away in what is now being coined “strategic default”. Of course there are a plethora of untold and unforeseen risks in every transaction, this is just two examples.

      You asked;

      However, I can and did add a sunroom to my home. Was I supposed to call my MC and inform them, and let them inspect the progress and the completion and if not, why not?

      You did not have to get permission to make a capital improvement to the property because you OWN the home. You CHOSE to make those improvements. By doing so you were reducing the lenders risk by INCREASING the value of the collateralized asset and because when you presumably paid cash for those improvements you were INCREASING your equity position in the home. Historically people who have more “skin in the game” [equity] tend to take care of their homes and fight to keep them when they encounter tough times.

      If you had failed to complete the project and devalued the property in the process i.e.; you left an exposed roof open or a hole in the wall that exposed the house to the elements, well in this case you would be in breach of your mortgage covenants where you agree not to devalue the property and to the contrary you promised you will take steps to protect the banks interests at all times. The bank could choose to call the note. Plenty of home owners begin projects that take longer than expected to complete but they don’t jeopardize the lenders lien interest in the process.

      You asked;

      We all agree that protecting the home from further damage is in everyone’s best interest. What happens if the homeowner can’t afford all that is needed?

      It is the homeowners responsibility first and foremeots to protect EVERYONE’s interest including his lender. Thats what he agreed to when he borrowed the money. If he can’t afford to pay for th repairs out of pocket and wait to be reimbursed then he should choose a contractor who can cash flow the job. This is generally the mark of a fiscally responsbilble contractor and although by itself is not a guarantee the work will be done to your statisfaction, it is certainly not a bad start!

      You asked;

      Even if the majority of the check should be given to the MC isn’t it everyone’s best interest to get a third to the homeowner right away?

      Simply put; NO! If the homeowner lacks the funds to even start the job himself, then the propensity for the home owner to misappropriate the funds is high. The lender needs to take steps to assure that they only disburse for work that has been completed. This adds and additional level of protection to the homeowner that the contractor will actually complete the work that was agreed upon.

      You Said;

      Lastly, I pay for insurance to protect me.

      Actually that too is incorrect. If lending is all about risk, insurance is that to the 10th power! You buy insurance in lieu of financial responsibility. Think of it like this; most state laws require that you keep some form of proof of financial responsibility on your automobile as a prerequisite to driving.They don’t mandate that you purchase a commercial product like insurance. Until Obama-care there has never been a law state or federal that has required of its citizens to purchase a commercial product.

      In the case or auto insurance the trouble is that with automobile insurance, most people find it more palatable to pay insurance premiums than to post a cash bond and place that bond at risk each time they get on the road.

      You pay insurance premiums to reduce and minimize your risk. Some people choose zero deductible policies with high premiums while others choose the inverse. Either way you do not have insurance for protection, you have it to mitigate your risk of financial loss.

      Finally this goes back to my original argument – this is no different than if you had a claim against your auto policy; your insurance company would make the check payable to you and the bank if you had a loan and the bank would want evidence ALL the work had been done (not just part of it) before disbursing ANY of the funds to you or the body shop. The only reason this is different is because most people NEVER file a homeowners claim but we have ALL had an auto claim.

      PS – I was curious to see if anyone in the biz [restoration companies] has been experiencing unusual delays in cashing insurance claims checks. So I reached out to a friend of mine and was surprised to learn that his bank has begun placing holds on the checks. When he asked his banker why he was told they have begun to see these claims checks being returned payment stopped or endorsements cancelled.

      Of course this is no means representative of what is happening at large and is just one anecdotal example here in Raleigh with one company and one rather large bank in the community.

      Because I am the curious type I called my friend Don Fuller who is an agent with North Carolina Farm Bureau and I asked him under what circumstances a claims check might be cancelled. Don tells me there are really only two reasons a claims check my be cancelled;

      1.) Fraud
      2.) Reopening of the claim [more damages from the original claim that need to be paid]

      This could be another reason why the mortgage companies are slow to disburse the monies. It’s not at all uncommon for CAT CHASERS and homeowners alike in any economic times to see an insurance adjuster coming and embellish a bit if you know what I mean.

      I really hope this has helped. Thanks for the great comments and feedback.

      1. So if I failed to complete the construction project I would be in breach of my convenant just like it would be if I failed to repair my home after the tornado. Yet in one case the MC doesn’t care and the other they hold on to the money. In the case of the construction project I have their complete trust in the case of a tornado I am somehow untrustworthy.

        I don’t mind that the MC has authority if it weren’t arbitrary and based on making interest on my money. I imagine that 10k is the break even point which is why they simply endorse anything less even though 10k could represent a significant amount of damage on a small home.

        I don’t know how you assume in this economy everyone will have the resources to protect their home from further damage. I didn’t just have a damaged roof I had 2 walls ripped away which exposed my home not only to the elements but to looters. Luckily I do have emergency funds for such an occurence but there have certainly been times in my life when that wasn’t the case and many people affected by this tornado certainly do not have them either.

        I am going to assume that even though you have to tow the company line you are a compassionate person who recognizes that long delays in getting money from th insurance company, to the mortgage company, then back to the homeowner creates a hardship on the victims of these disasters.

        Obviously if I knew at the beginning of this mess what I know now I would have made different choices initially however I can’t see how the average person would just instantly know to contact a restoration company especially when you don’t have power for a significant amount of time and the ambulance chasers start showing up at your door. Even when we realized we needed one it took time to make the selection. We took recommendations and called 4 companies. 2 of them were so busy they never called back and the other 2 had to be researched and interviewed.

        The clock starts ticking the moment the disaster happens. I will never agree that the MC is protecting their interests by taking nearly 3 weeks to cut the first installment check when it was 4 weeks to get the money from the insurance company in the first place. That kind of delay is inexcusable in the information age.

        I also happen to know that not every MC feels the need to make the homeowner jump through hoops. A close friend’s MC gave them every dime immediately and their claim was larger than ours.

  71. Robert M :

    If there had been no tornado and I decided to tear down my home and build something smaller and less valuable, as long as I make my mortgage payments what rights does my MC have? If they don’t have any, why do they have rights after a disaster?

    Robert I didn’t reply to your question because I assumed it to be rhetorical because a person as smart as you are surely has read the covenant documents in your mortgage agreement. Apparently I was mistaken and shouldn’t have made that assumption.

    So here is your answer – When you agreed to the terms of the loan in the promise to pay that document allowed your lender to take a security interest against the real property and any improvements thereon.

    The mortgage instrument also called a Deed of Trust in North Carolina and other states as well is what gives teeth to the Promissory Note. This is why the Promise to Pay is generally two to three pages and the security instrument is more than a dozen!

    If you will review that instrument carefully you will discover language that requires you the homeowner to take no action that would intentionally devalue the property whether it be by creating a bio-hazard like setting up a Meth Lab to pulling the drain plug on your cars oil pan without having a pan to catch the used oil.

    In the example that you cited where you could intentionally devalue the property by razing the improvement and replacing it with a lesser valued improvement and like the previous two examples cited these are things that would put the lenders interest at risk. In these cases the lender could call the note [demand payment in full] and initiate foreclosure proceedings if demand isn’t met.

    Finally that document also contains language that also impels the homeowner to take steps to take reasonable steps to protect the value of the home hence your responsibility to take steps to prevent the home from sustaining further damage until the insurance company settles your claim and you are able to comply with the lenders requirements for cashing the insurance claim check.

    I hope this answers your question and sincerely hope that you can get back to a place that resembles “normal” soon.

  72. Ricardo, as always, spurs terrific discussion and helps raise the questions insureds have in a time if crisis. It seems simple. Collect the check, pay for the repairs. But when insurable interest is shared by not just co-owners, but also mortgage companies, everyone with the right must have access to the compensation and the assurance insurance will take care of the problem. I will warn those most seriously affected not to assume an insurance company does NOT want to pay. It is why we are here. My fellow agent had a client suffer a total loss … a 350000 claim. That insured was preyed in by “legal representation” looking to protect an insured who did not need protecting. Instead, thus insured had to pay for these legal services out of the check received. So money was squandered for fear of a threat which did not exist. As part of a company I was proud to represent during the recent tornadoes, we responded with what was due our insureds. I believe insurance to put lives back together, not aggravate open wounds. Thanks, Richardo, for the forum to uncover the truths in our businesses. You are a credit to your profession — as well as a good friend to mine.

    1. Don, the problem is until you know what your insurance company will do you have no idea whether or not you need professional assistance. In my case, my very reputatble insurance company has only given me 2/3s of what i need and I didn’t even find that out for a full month after the tornado. Then I realize that I don’t just need a general contractor but a specialist who will go back and fight for a fee because I am busy fighting with my mortgage company.

      Even if I were to agree that the mortgage company has rights in this situation what good is the insurance as protection if I can’t protect my home? My neighbors home may now be a total loss because they weren’t home when the tarp came off their roof while they waited and waited for the MC to protect their interests. In these situations shouldn’t at least a third of the money go directly to the homeowner so that we can immediately start making the repairs we need to protect from further damage? I paid for my roof to be put back on out of my own pocket, others in this position do not have the resources to do what we had to do.

      I notice your friend Ricardo didn’t answer my question. Perhaps you would like to take a stab at it. If there had been no tornado and I decided to tear down my home and build something smaller and less valuable, as long as I make my mortgage payments what rights does my MC have? If they don’t have any, why do they have rights after a disaster?

  73. I am dealing with a USDA loan on my fathers house. He was moved into a nursing home in April, He is in the process of selling his house to a private buyer (no realtor). 3 days before closing, his house was hit with a terrible storm and caused just over $11,000 in damages. Now the closing is on hold until the roof is repaired. It has been 2 weeks and the insurance company is finally mailing a check to my dad. I did not know before hand that USDA had to sign the check along with my dad. I called USDA central servicing and they will send my dad a package of paperwork for him to fill out and mail back. How long is this process? What is in the paperwork? Why can’t he just sign the check to get the repairs done as soon as possible, why does USDA have to sign also. If the inurance adj. already filed all the paperwork, what does USDA need to have filed also. If we do not close by June 30th, the title company has to do new paperwork for the sale and my dads buyer is not sure he wants to wait a couple more weeks for USDA to give the payoff amount, plus the delay of the nursing home to get my dad to sigh papers again. My dad is going into the 3rd month of missing his house payment because the nursing home takes his SS check which is what dad used to make his housepayment with and he has no savings. Does this sound like it is going to be able to be done in a week? If the buyer backs out because of the length of time it takes for USDA to do their end of the paperwork, he will just let the house go into foreclosure, since he gets no profit from the sale anyhow (do to the state taking their share for his Medicaid assistance in the nursing home) why should he even bother? We all live out of state from my dad so we cannot be of assistance to him in regards to helping with the house other than phone calls and searching for help on line. How can we make this happen as quickly as possible?

    1. Georgia – yours is very difficult situation indeed.

      First it sounds like your father wasn’t very diligent with his estate planning and thus he has left a bit of a mess to deal with by his heirs. My experience tells me that there are probably other siblings involved yet you and your husband are the only ones who care enough to assist dad and you should be commended for that; this is me commending you for that!

      Second the reason the USDA has to endorse the check is the same reason your father has to; because they have a legal interest in the propoerty and judging by what you said earlier

      If the buyer backs out because of the length of time it takes for USDA to do their end of the paperwork, he will just let the house go into foreclosure, since he gets no profit from the sale anyhow (do to the state taking their share for his Medicaid assistance in the nursing home) why should he even bother?

      It sounds like his lender, in this case the USDA is the only one who probably cares given they have the largest equity stake in this house.

      Third I assume that the contract the buyers engaged in should have some language about time being of the essences, reasonable delay, acts of God etc. However because i I am neither an attorney nor a licensed real estate agent and it sounds like you have not sought the counsel of either I advise to seek the advice of both because you need it.

      Finally I a betting that dad would be crestfallen at the very least to learn that his home is being foreclosed upon even if there is no net equity from the sale. My experience has told me that persons of a certain generation [and I am admittedly making some assumptions that your father is of a certain age or older] take great pride in honoring their obligations. For your father it may be an issue of doing the right thing! While that doesn’t mean much today you may want to ask him. When the forms are received in the mail, follow the instructions, FEDEX the returned documents and get the house fixed ASAP! If the buyer really wants the house he will understand and will wait, if not, find another buyer. It takes months to foreclose and by then the house should be sold!

      google-site-verification: googlea1cccc1d869b5a7f.html

    2. Georgia, to speed up the process you need to have the restoration company all lined up because USDA is likely not to send any checks made out to anyone but the contractor due to your father being behind in his house payments. Then call USDA ask to speak to a supervisor, plead your case, and ask if they have a priority fax number to return the documents. Watch out for unnecessary BS like mine wanted me to send invoices to prove that 50 percent of work was done before they sent out an inspector to make sure that 50 percent of work was done. I told them I didn’t need to prove it twice and demanded they send out the inspector.

      Keep in mind, they don’t want that house, especially if it is damaged.

      You are in a tough spot because no matter what this will take time and the rules change when the homeowner is behind.

  74. I live in an area that was declared a disaster area. So while I do have a beef with the insurance company for taking a month to get me the check I have to understand that I was not the only one needing a visit from the adjuster.

    How much does it cost to get your car out of the fast lane as opposed to having a roof tarped and temporary walls put up to keep looters out? So while the mortgage company is “reasonably” delaying my first installment check for nearly 2 weeks to protect their interests they are creating an unreasonable burden on me and my bank account. Sure there were disaster teams in my area but the damage was so widespread did I dare wait for them to get to me or did I do what I was told and try to prevent further damage? In my case, had I waited the tarping of the roof it would have been too late.

    Also, I was told the county would stop picking up trees for free if I didn’t get them all hauled to the road I had to bare that burden as well or risk paying a lot more later.

    So my neighbor’s tarp came off over the weekend during another thunderstorm. Their mortgage company protected themselves right into further damage to the home.

    So let’s say the tornado never hit my home. What rights do the mortgage company have with regard to me remodeling my home in such a way it is worth much less? What if I decided to knock the whole thing down and build something smaller? What recourse does the mortgage company have as long as I make all of my payments? Even if the mortgage company should have rights in this situation the first 1/3 should be paid immediately without the “reasonable” red tape.

    Lastly, what percentage of homeowners ran off with their checks before this system was installed?

    1. Robert – it sounds to like most of your angst has been caused by the choices you have made. You chose to own instead of renting. You chose one insurance company over the next . You chose one lender over another and worst of all you chose to act as your own contractor instead of using a restoration company who could have handled al of this with ease for you.

      If I had to guess I would say that you have probably learned some valuable lessons through this experience like insurance companies not all lenders are not created equally! Clearly you have a lot to be grateful for because a lot of people lost their homes and everything in them and yet others lost their lives and loved ones. Bless God for his mercy!

      1. You act as if an average person would know the procedure and thus select companies that work better with you in disaster situations. I do wish I had hired a restoration company from the get-go but that is not something you are taught it is something you learn the VERY hard way. There is also not a wealth of information available online for people in my situation.

        I notice that you didn’t comment on my query about remodeling the home and what rights the MC has in those sitations. So I guess we can all agre that the MC only has rights when it is the most inconvenient for the home owner and when it has something to gain by making interest off of my money.

  75. Shouldn’t the mortgage company be then held responsible if the home sustains further damage while the homeowner is forced to wait 48 hours to receive a fax with the necessary forms, 3-5 business days upon receipt of the completed fax for the information to be entered, and then another 48 hours plus mailing time for the check to be issued and received? All of this after the homeowner had to wait 4 weeks to get their insurance check in the first place?

    1. Robert – thanks for your great question. Since posting this article I have been amazed how it has been the most read article on my blog which tells me that a lot of people out there need this advice and yet you are the very first person to comment, so again thank you!

      The short answer is NO the mortgage company would not be responsible for further damage to your home because they took a reasonable amount of time to ensure the property is actually restored to its post catastrophe state; hence the reason the check is made out to all interested persons. The same delay or greater could occur if there were a disgruntled spouse or worse who co-owned the property and could care less. In that case the check might never get endorsed without legal action! There are all sorts of legitimate reasons why there might be a reasonable delay to cashing your claim check.

      If your car blew out a tire on the expressway; you wouldn’t leave it in the fast lane would you? Of course not, you would take steps to ensure the car sustained no further damage even if the cars tire was covered by a third party warranty or insurance. The same logic should be applied here. In all cases it is the responsibility of the homeowner to take reasonable steps to ensure that no further damage occurs to the home. For example it you have missing shingles, cover it with a tarp, if your windows are blown out, cover it with plywood or plastic.

      In your case it sounds like your beef is not with your lender, even though they are the latest obstacle in your path but more appropriately your insurance company who took four weeks to process your claim! A lot of the delays that you are struggling with can be minimized by the use of modern technology like email and fax machines and finally FedEx. Most of your quality lenders will offer those in lieu of US Mail if you just ask because like you most are homeowners and understand just how difficult this process can be.

      Finally I spoke with my friend and agent Don Fuller who writes for North Carolina Farm Bureau and he tells me that in cases of widespread property loss and casualty like tornadoes, flood, hurricane, earthquake they have disaster response teams on the ground usually within a matter of hours to assist homeowners seal up homes and begin the process of returning their lives where possible to pre catastrophe condition and they will recommend restoration companies who will bill the insurance claims directly and work with your lenders too so that you can get this event behind you as quickly as possible. . If you didn’t get this kind it sounds to me like now might be a good time to reevaluate your insurance agent & carrier.

      If you haven’t already reapired your home here is a good article to read called What to consider before choosing a Restoration Company vs. Contractor/Repairman