What Gives My Mortgage Company the Right to Hold My Insurance Claim Check?

This is a follow up to a blog titled;

How to Cash Your Home Owners Insurance Claim Check

Why Can My Mortgage Lender Hold My Insurance Claim Check?

But it should really be just called Part II because since writing that post  it I have received thousands of views, dozens of calls, emails and comments  and complaints which for some reason are directed at me.

What’s ironic is that I wrote the post to save the time from needlessly repeating to people I know who were asking me that same question over and over again.


The Golden Rule; He Who has the Gold Makes the Rules

 The simple one word answer is  “MORTGAGE”. Because of this your lender can and will  dictate to you how and when they disburse the money. They can because  you gave them permission when you borrowed their money and pledged your property as collateral!

To be specific  if you have a modern mortgage originated in say the past decade, the security instrument known as the mortgage and is  also referred to here in North Carolina as a Deed of Trust is a Uniform Instrument that likely uses the following language specific to insurance claims and property losses;

In the event of loss, Borrower shall give prompt notice to the
insurance carrier and Lender. Lender may make proof of loss if
not made promptly by Borrower. Unless Lender and Borrower
otherwise agree in writing, any insurance proceeds, whether or
not the underlying insurance was required by Lender, shall be applied to restoration or repair of the Property, if the restoration or repair is economically feasible and Lender’s security is not lessened.

During such repair and restoration period, Lender shall have the right to hold such insurance proceeds until Lender has had an opportunity to inspect such Property to ensure the work has been completed to Lender’s satisfaction, provided that such inspection shall be undertaken mortgage deed of trust document promptly.

Lender may disperse proceeds for the repairs and restoration in a single payment or in a series of progress payments as the work is completed.

Unless an agreement is made in writing or Applicable Law requires interest to be paid on such insurance proceeds, Lender shall not be required to pay Borrower any interest or earnings on such proceeds.

Fees for public adjusters,
 or other third parties, retained by
Borrower shall not be paid out of the
 insurance proceeds and shall be the sole obligation of Borrower.

If the restoration or repair is not economically feasible or Lender’s security would be lessened,the insurance proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with the excess,
if any, paid to Borrower. Such insurance proceeds shall be applied in the order provided for in Section 2.

Deed of Trust is What Pledges the property as security to the note


Now that you know WHY your lender can hold your check, let’s do something about it.  Instead of complaining call your mortgage company right away.  And the fastest way is NOT TO CALL the 800 number from your statement.

Your FIRST CALL should be to your Mortgage Loan Officer who wrote your loan. We call that “Service after the Sale”. But alas, given that 75% of all Mortgage Loan Officers have exited the business instead you should call the ESCROW Department.  That is the department that once a year at the end of January sends you a a statement with either a check or a bill attached to it with either good or bad news. Most of the times you can find that Yearly Escrow Statement online of you subscribe to online billing from your lender and can find the detailed instructions and forms there too.

The Escrow Department will likely be the same department that will cash and hold your insurance claims check. Don’t be surprised if your bank/lender place a hold on the check for up to five business days due to the potential for fraud given the number of mass losses that have occurred recently.

Do everything they ask you to do and document to whom you spoke, the time and date and whatever you do DON’T MAIL THE CHECK!  If possible hand deliver it. Find out if there is an Officer of the company in your city or nearby where you can take the check in person to be endorsed or processed. When that’s not possible, FEDEX is the next best option.

Once you have complied with all of their requests and feel that the requests being made of you are unreasonable then your next step should be to take to the Internet and post your story.

This is the fastest and most efficient way to get what you want. Tell your story in a succinct fashion omitting the anger and rhetoric that you will naturally want to spew. Here is a good place to start.  Make sure and name your mortgage company by their full name not initials. Post pictures of the damages and if you have letters and documents that support your claim. Name the persons involved and the dates and times that you spoke to and  faxed  documents. Then have fun posting it in as many places as you can to see how long it takes your lender to contact you!

Your mortgage lenders  marketing and public relations department has people trolling the internet looking for legitimate complaints like yours that they can resolve and show they care. When they come across reasonable people whose demands are reasonable, they will go out of their way to help. BTW – when they do resolve your problem, be a good interneter and post a follow up comment so others know how it was resolved.

If that fails your next step should be the State Commissioner of Banks and Insurance. Some states may be the same agency while others may not. And in some cases these types of complaints might even be handled through the state district attorney….continued on next page

What gives my mortgage company the rifght to hold my insurnace claim money?
What gives my mortgage company the right to hold my insurnace claim money?

Finally, If there is a next time instead of DIY,  hire a professional and reputable Restoration Company who can handle all of this for you. They are trained experts who deal with Insurance Companies  and Mortgage Lenders every day.

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

140 Comments on “What Gives My Mortgage Company the Right to Hold My Insurance Claim Check?

  1. On April 1st we had a tornado in our area that caused a oak tree to go through the middle of our house. Since my mother-in-law received the insurance check on April 11th we have been dealing with her mortgage company HFC Beneficial HSBC to release the insurance check so that we can rebuild our home. We are currently at a stand still with the work since we have spent our savings to get the work started while waiting on the mortgage company. We are not talking about a small amount, we are talking around $25,000. We have been told something different every time I’ve talked to them. My mother-in-law paid off her mortgage balance that was $4,500 (although they took $5,100 out of insurance check for payoff) and now they are saying that they are going to keep the money in an escrow account for another 15 to 30 days. Our house is unlivable at the moment until we can get this check to rebuild our home. I have left several messages for the office manager Richard, who is apparently the only one who can expedite the release of the escrow account and get us copies of the deposit slips so I can see if the money has been in an interest bearing account, but have not received any call back and he never can be located when I call. I would not recommend anyone get a mortgage with HFC Beneficial HSBC since this is how they treat their customers of 11 years.

    HFC Beneficial HSBC Credit Center | HFC Beneficial Welcome
    HFC Beneficial Splash

  2. Hi Rick, Citi Financial Escrow services is withholding a Claim of $5500.00 but here’s the kicker, we are in the last year of Chp 13 and do not have the funds to begin work on flooring and insulation replacement over a busted water pipe. To me it seems that they are giving us some “Payback” for filing. I contacted our Lawyer but doubt will be anything he can do, he suspected they would just release the funds. Guess they think we will use the funds on some vacation that we haven’t taken in 12 years. I’m thinking of posting on the internet as I have the Escrow folks names and dates. I had planned on doing the work myself and repairing other problem areas such as a rotting Facia and replacing bad gutter. what will a inspector bother with looking at a repaired Laminate and insulation????

  3. Can we be our own general contractor and charge for our time , materials and any labor we pay for or supplies to do the repairs on our home we are having issue’s with our mortgage company not wanting to sign off on our insurance claim ck . We have a new roof we paid for out of pocket due to water damage because we could not wait for the insurance to agree on the amount that was needed to be issued to us to cover the cost the amount the insurance company sent is still not enough to cover all the repairs needed . The mortgage company is also in the check as the payee on the check. There is other damages to the home that we cannot and complete the repairs until we receive the money from the mortgage company in our case mortgage co. is a (credit union) . We are not able to even live in the home till repairs are finished due to Heath issues. Can the mortgage company keep any of the money. We have had many issues with this credit union on other issues so are very concerned they will find a loop hole.

  4. Can I keep a refund on a claim check that I received after my house was foreclosed on? Th e house was burned by fire and the contractor took most of the proceeds and did not finsih and the home was sold in foreclosure and since then I received the balance from the insurance company. Please advise how to move forward . Thank you

  5. i received an insurance check for $32,000 and my pay off on my home is only $8633.12 can i make my mortgage company send me the funds over my my pay off?

  6. I recently filed a claim on a barn that was built out of pocket after I purchased the property. My needs have changed and I no longer need that type of barn. Why does my insurance company have the right to order me to rebuild something that they had no monetary interest in?

  7. Question: The work I had done on my kitchen did not require permits (no plumbing, no electrical), so I didn’t feel the need to use a licensed contractor. Now at the 90% inspection point, my mortgage company is asking for the contractor’s license. Can they withhold insurance funds after the work is done because the contractor did not have a license? The contractor is waiting to be paid and I’m not sure how to approach the mortgage company…?

    • I’m curious to know this is also. I’m in the same situation. Did you happen to find out the answer? I thought maybe the homeowner can sign a waiver? Can they require that the contractor not complete the job and that you have to hire a licensed contractor to finish? No contractor wants to complete another contractor’s work.

  8. On one of the comments up there somewhere you recommended the way to take care of the unscrupulous mortgage companies was to report them to the state insurance commissioner and the one in the state the mortgage company is based in. Well, I tried that. When I called Washington state’s Insurance Commissioner’s office, I was told i was not their problem, it was an issue with the mortgage company, not an insurance issue.

    I am still trying to figure out where to report the mortgage company that refuses to give us instructions in writing on their policy for releasing the insurance funds to rebuild from our fire. Unfortunately, we had forced-placed insurance so the amount isn’t nearly what we need to rebuild but we could get it done, if the mortgage company acts at all reasonably. We can’t get the same answer twice and they’ve gone so far as to say they won’t provide funds for clean up even though there is a line item for clean up in the document from the insurance company. I hate to get a lawyer involved because that will only give us less to rebuild but it’s beginning to look like we’ll have to.

    • I sense the frustration in your comments. Have you tried the BBB or the office of your states Attorney General? Often the AG’s office will have a consumer protection division that would be very helpful, and not cost. Trust me, a letter from the state AG will magically resolve a lot of problems.

      • BBB is a non profit org. and have no real knowledge, on how a business is conducted on any of it’s members, if you don;t believe me make a call to any BBB office and ask if they know the owners or if they ever made an inspection on that business the answer will not be one of assurance or confidence on that particular business, their rating are based strictly on consumer comments.

      • Hi Ricardo. My name is Trevor and I live in Livingston parish Louisiana. Due to the recent catastrophic flooding I have recently put in a claim with my flood insurance and I am expecting a check. Its not a total loss. I am under mortgage and I understand the usaual process, but initially both my flood insurance company and my bank told me the check wil be written directly to me because THE BANK AND FEMA DID NOT REQUIRE ME TO HAVE FLOOD INSURANCE, IT WAS MY PERSONAL DECISION. they said it therefore had nothing to do with the bank. However the claim department listed my bank on the check and are saying I have to give it over to the bank because they have a vest of interest. So I’m not sure why they thought otherwise in the first place. At any rate, I am yet to see this policy written. So my question to you is: in the case of a borrower not being required to have flood insurance, do I REALLY still have to go through the usual bank fund release process, or is someone giving me the wrong info? I paid cash for my flood insurance outside of escro and my bank was never on my policy until now..


  10. I filed a insurance claim 5 months ago. It has been been in half by insurance company. I sent check to mortage company but its been 5 months ago. They finally sent me a check for half the amount of half the amount of the claim. I dont have enough funds to repair my roof.mortage co says they will issue rest of funds after work completed n inspection done. How do i get mortage co to at least pay half? What rights do i have caused its raining in my housr

  11. I have been a loan operations manager for too many years 🙂 Most mortgages have a clause in them that requires you to cooperate with your lender in these instances. In your case, the lender obviously wants control of the funds. We would want the check endorsed by you (and sent to us), if the the dollar amount was large enough. It seems excexxive for a such a small amount.

  12. I have a leak in my shower that is seeping into my bedroom my insurance company settled the claim for $2497.75. I have a contractor who has agreed to take care of all of the repairs for the amount approved. I am concerned because my mortgage company is asking me to endorse the check before I mail it to them for their endorsement. This doesn’t make sense to me. I can just endorse it when they return it to me. Is this normal policy, to endorse the check prior to sending it mortgage company for their endorsement?

    • Tiffany – first, I’m really surprised that you filed a claim for $2500 in damages given that will impact your rates next year. However, if your lender has a local branch, I would recommend taking the check to their local office and get it signed by a local person.

      • I’m shocked that you have the arrogance to pass judgement on a homeowner who has paid their insurance premiums and you have no logical understanding of their financial situation. I guess I’m not that shocked – most so called financial specialists are clueless.

        • Hi Rick, thanks for your comment, as you can see, there have been quite a few comments, I’m curious who you think I’ve ‘passed judgemnt’ on.

          • I would hazard a guess that he is talking about Tiffany from May 23rd. You answered her question as if she were unintelligent for filing a claim that, in your opinion, was small and would “raise her rates”. However, you really don’t have any idea of her financial situation or any factors surrounding the claim. $2,500 might be the world to her. As a CPA, I can see why Rick Hooper might think it was judgmental. She may or may not have some extenuating circumstances and none of us are in a position to assume $2,500 is inconsequential regardless of where we are in our lives currently. The people that can afford your services probably aren’t reading your blog to figure out situation themselves. Arrogance would be to assume only the rich and entitled are checking in.

          • That is exactly why I pointed out to her the foolishness of filing a claim for $2,500 because a person of means would already know that filing a claim for a net of $1,500 – $2,000 would cost them far more in increased annual premiums than they could stand to gain by filing a claim. Whereas a person of say limited means usually doesn’t know what they don’t know about money…Th fact is that people who have money interact differently with it than people who don’t which may be the reason for the disparity to being with.

  13. I had a large shop burn down on my property. The mortgage compost valued it at 15k when I bought the house. I had since finished it out completely to a working shop. The insurance company wrote a check for 187k with the estimate for repair being 207k. I have been trying to get the mortgage company to agree to 1/3rd down 1/3rd at a point in the building and the remaining 3rd when the shell of the building is complete. They do not want to release money because we are being our own general contractor. Even though we did all the work before. We live in the county and do not have a need for permits. My father lives with us who had been a certified general contractor in the state of fl from 1982 until 2012 when he retired and moved to Texas to live with us. I can not understand the reason for then not releasing the funds in set payments. We have asked for the standard and provided the details for the building process. We will be saving over 50k by contacting the job our self. That we plan to put into the property in the form of another barn. What can we do about them not working with us?

    • There’s probably not much that you can do about it. You agreed to their terms when you borrowed their money. And although I understand your point, the insurance company país to make you whole, not to improve your property. The best thing for you to do is to hire a contractor who will act as the gc and let you actually manage the project.

  14. My home is in need of a roof replacement. The insurance company has issued me two checks; one for $7453.99 and another for $911.00 to replace the roof. I hired a contractor and we followed all the instruction from BancorpSouth Bank. We are in Georgia and the bank is in Tupelo, MS. Our mortgage was sold to them without our consent. When I contacted the bank to verify if they had received all the documents and signed checks; they informed me that they had received everything but they would only be releasing $2000.00 to start initial repair. I contacted my contractor and he stated that would not be enough to get started. So I conference the call with him and the mortgage company and the mortgage company agreed to send him more if he faxed a statement to request more funds. He informed the mortgage company that he had been in business for over 50 years and never heard of such and they that were being unfair to the homeowner and he was unwilling to do that. The bank never allows me to speak with anyone from the loss draft department; I have to only talked with the customer service supervisors and they have been very difficult. I asked why were we going through so much red tape, she informed me because they do not have my March payment. I was floored! I am totally current on my mortgage payments and did not understand what did this have to do with my leaking roof getting repaired. My payment is not late until after the 16th of each month. The documents that I mailed backed stated that 100% of the check would be mailed backed if the damage was under $10,000. Question: Is this legal? I feel like I need to get an attorney.

    I will be contacting the insurance commissioner in Georgia and Mississippi. I refuse to search for another contractor. The insurance company should have just sent the check to the mortgage company, let the mortgage company hire a contractor, and left me out of it.

    BancorpSouth Bank in Tupelo, MS. should improve their business practices.

  15. My recommendation to all the homeowners out there having a hard time with these deceitful mortgage companies and banks: File a complaint with your State’s Bank/ Insurance Commissioner, and also in the State where the snake company is located. That is the only way to make them play fairly-report them to the government regulators that they are under.

  16. Sula, due to the fact you went into foreclosure, the bank will not endorse the check over to you, just because it was foreclosed on dose not free you from the dept, and if the insurance company will not reissue and I know the bank will not give you the letter you are asking for, that check may as well be a used as monopoly money…

  17. Quick question. I had a leak under my home that ruined a small area of my engineered hardwood floors. The insurance company wrote a large check to replace all of the hardwood floors which the mortgage company is paying to me in 3 installments as the damage is being fixed. I have been able to find the original flooring and plan on just replacing the room where they were affected rather than the entire house. As long as I fix the area that was affected and it my floors are equal to or better than before the damage, does the bank have to give me the extra money from the insurance agency? The instructions they sent me states that they will give me the extra money… not sure if I believe that. Thank you!

    • Whitney– If replacing only the “Affected room” wasn’t good enough for the insurance adjuster, what makes you think it will fly with your lender? Remember that the lender is often a majority stakeholder and they are more concerned with the total value of the home. It’s obvious based on what you have told me that the adjusters concern is that by replacing only the “affected room” you would end up with mismatched floor boards and that it could have an adverse impact on your homes overall value.

      I’m curious to know how it turns out, so please be sure to check back, OK?

  18. Here is a good question… I have a insurance claim check for a roof I replaced 4 years ago and paid for at the time as the insurance company was going to be a few weeks on payout and my home was up for sale. I moved out of state and the insurance company did send the check but I didnt worry about cashing it and forgot about it. My home forclosed and I lost it. I do not owe any money to my morgage company as the home was sold quickly for more than what I owed to them. Now I have this check and it is made out to me and my morgage company. They will not endorse it and the insurance company will not reissure it to me only without a letter from my morgage company releasing me and showing the debt is satisfied. What do I do with this check? give up or what?

      • As far as the repairs… It was after a large hail storm in Texas and these roofing companies can in from everywhere. They agreed to do it for the exact amonut of me check because me deductable was $1000.00 if I would pay in cash. There are alot of illegal Immiagrants in Texas so this was not new for me on the cash deal. I did and was given a reciept. I went through a pretty bad divorce and lost the paperwork on my mortgage and forclosure information as they were taken buy the EX. So no reciept anymore. The check is for $5917.78. The mortgage company it Centry 21 Mortgage. I have tried to talk to them and requested my paperwork but no help and they will not sent me anything.

  19. Whatever, we had gotten a mortage from a local bank. Guess what, they sold our mortgage to sun trust all the way in VIRGINIA. How the hell am I supposed to do business with them when they do not even have a institution in Texas. It’s a bank scam. I call them and call them and they just keep giving me the run around and keeping the insurance money. .Meanwhile I have paid all the contracters myself out of my life savings and now I have no retirement money. They are legally robbing me, and there’s nothing I can do about it but bend over and get shafted. Sun Trust Mortage company is a bunch of crooks and thieves,, and I had no say in my mortgage getting sold. F them and FU and all bankers.

    • Tom – it’s pretty obvious to me that you are angry at the world right now, and frankly, were I to find myself in similar circumstances I might feel the same.

      However, in case you couldn’t tell, this is a forum where we use decorum and try to offer help to those who are in your position.

      Therefore, if you have a question, kindly phrase it in the form of a question so that I can try to help. Otherwise, if you just need to rant, you can do so on the Wall of Shame.



      • Ricardo: I see you are in the business, so you are part of this problem, whether you agree with it or not. The Mortgage and Bank industry almost destroyed this country in 2008, and the taxpayers bailed them all out. Now it’s back to the old tricks and massive CEO bonuses. The reason people are upset is that certain mortgage companies are unethical, and keeping or delaying my insurance money for the house I live in that I want to repair borders on fraudulent activity on the part of the bank/ mortgage company. I find myself in the same situation with a third party outfit called insuranceclaimcheck.com, operated by NYC based Assurant Inc. When I tell you these people are snakes and will lie and delay payment of my insurance proceeds, that is using a lot of decorum. Let me ask you a question: what would the mortgage company do if I just ripped up the insurance check and refused to make repairs to my home? My point is that once the claim is approved and paid, if the homeowner chooses to live with the damage to his home, that is his choice. The problem lies when the bank/mortgage co wants to keep the money longer than they should.

        • Why file a claim if there is no intention to repair? Wouldn’t that border on fraud? You chose to borrow money to buy the property, so in what world would you expect those with a vested interest in that property to not want to be privy to it being taken care of…

          • Mia – filing a claim is about collecting on an agreement between a homeowner and the insurance company. The agreement between those two partied are to compensate the owner for the losses to the property sufficiently to restore the home to it’s pre-loss condition. There is nothing in that agreement that would impel a homeowner to actually do so. In fact, if it weren’t for the mortgage, there would be nothing impelling the homeowner to make the repairs.

  20. I was delighted to find this site. I have an unusual question. I recently had a flood from a broken pipe in the kitchen, and the insurance company was very helpful and generous with their settlement, which totals around $10,000.00. They told me that if I had a mortgage on the property, the check would be made out to both myself and PNC Bank, the mortgage holder. My mortgage will be paid off at the end of this year, and I owe less then $3,000.00 on it. Imagine my surprise when I received the check, there was no PNC Bank listed on it. Is it okay to just deposit it? Thanks.

    • Mike – if the check is made out to you and you only, then there is nothing preventing you from cashing the check. Given that you only owe $3,000 on the mortgage, it would seem only logical to me that it is you, not your lender who has a greater interest in restoring your property. COngratulations on nearly paying off your home! I hope you get your home fixed soon.

  21. I would recommend anyone going thru a problem with a high profile bank needs to refinance to a local bank.
    When you refinance, the new bank will make sure you have the escrow.

    • Thanks for your comment.

      Although there is merit to doing business with people in your community who know, like and trust each other, this is not a viable option to most people. Either they are locked into a very low rate that would make it foolish to refinance, or they are simply not in a position to refinance their mortgage to simply escape the policies of a super big bank.

  22. at the completion of a loan modification bank of america asked for $5600 for a new insurance policy with bank of americas new insurance division called balboa. The $5600 covered insurance and property taxes. A few months later i contacted the CEO after being told I didnt have a policy. The next day I was contacted by a company called QBE first who told me i had a lender placed policy only. To avoid further damage i paid for the repairs. Over $10,000. My rep from the CEO office was having the payments credited to my account but never did and now I am behind and in danger of foreclosure. I have read it is a conflict of interest for the bank to sell insurance and hold the mortgage. I received a check 2 years later for only $3000 based on a lender placed policy. I have since purchased my own insurance but I am now behind due to the practieces of the bank and the CEO was of no help at all.

  23. We tried to get insurance that covered living expenses but flood insurance(especially in Florida) only covers physical damage. We were limited already as to what companies would even consider giving us flood insurance but of the few companies that would, none will reimburse or cover living expenses. Homeowner’s will but not Flood.

    That being said, we’re hoping for a grant of exception so that the branch can endorse. We’re getting separate checks for contents and structure. WF’s name will only join ours on the structure check. But the contents check won’t be very much considering that there is a $1000 deductible coming off the top (why do I have two deductibles on the same policy? I should probably ask them about that before renewal time) I’m going to see if I can speak with someone in a higher position than what I’ve been dealing with and see if there is any way to have only the amount to be owed to the contractor held and the rest released to us (hey I need a new washer and dryer too…..the laundromat adds up) in the event that the exception isn’t granted.

    Thank you for replying. We’ll definitely find an advocate in the branch, especially if we have a lot to fax back and forth, that makes it to where we have someone who knows the situation.

      • We do have homeowner’s insurance(required to get the mortgage loan) and a separate flood insurance policy. On the flood insurance policy it looks like there is a $1000 deductible for structural damage and another $1000 deductible for personal property damage(contents they call it). We have All State for flood insurance. I don’t know if anyone else has them and has seen this on their policy. I figured since it was all the same policy it would be one deductible for the whole ordeal.

  24. Our house recently flooded. Should be getting our insurance check in the next week hopefully. We have a mortgage with Wells Fargo and found out that the structure check will be in both my husband’s(his name on the loan) and WF’s names. The first agent we spoke to at the mortgage call center advised that all we had to do was take the check to a WF branch that had someone who was authorized to endorse it and once it was endorsed, we’d get the check and the contractor(state licensed) could start work on the house. Called a branch to see if they had someone that could do this and was advised to call the call center back because since its over $15k they may have different procedures on how its endorsed etc. Long story short, we have to mail it in because the claim they opened marked it “special:monitor”. They would disperse the check in three payments. This became a problem because we were going to be getting back more than enough to cover the repairs and replace a few items that were damaged as well as have enough to be able to procure a place to stay for the month it would take to fix the house. If they dispersed the payments then we would have to put everything in one room and the contractor work around us as we have little money after mortgage and bills to be able to afford anything else. The agent did tell me that once we got the check, we could go to a branch and have them fax a copy of the check, the statement of loss we got from the insurance company as well as a letter asking for permission for the branch to be able to endorse the check and there was a good chance. My question is this, since our flood insurance doesn’t reimburse for cost of living expenses incurred during the repair of the house, if WF corporate does not approve the branch to endorse the check, is there any way to get them to hold only the money necessary to pay the contractor and release the excess early? We have no place to stay and are out of options otherwise.

    • Sarah;

      I’m sorry to hear about your circumstance. Obviously you now know the importance of reviewing your policy to make sure that you have adequate coverage because as you can see, having to pay for temporary housing, while having to also make mortgage payments can tax a budget very fast!

      The first thing you want to do is find an advocate in a local WF branch who will act on your behalf. You can also use that person to send and receive faxes or accept express mail packages from the escrow department. If you don’t already have a checking account at WF< now might be a good time to consider opening one because they may be able to disburse funds directly into the new account for you when the release them, thereby reducing some of the turn times.

      That said, simply appealing to WF ought to be sufficient to get the portion of the claim that is not for real property loss, but rather personal property.

  25. I am expecting a settlement check from an eight year old claim it should be around $20,000. But I have not paid my mortgage in 2 years and I am in the process of short sale! Could the bank keep that money for delinquent mortgage payments?

    • In a word: YES

      Don’t expect for a moment that the lender will part with a single red cent pf that claim check or that you will be able to keep any of it outside of nefarious means. Think about it; you’ve lived rent free for two years, that alone has got to be worth at least $20,000 and you’re sayin that you’re asking the bank to accept less than the amount that you borrowed as payment in full. If I were you, I would try to use that claim check as a leverage when you find a willing and able buyer. Throw the claim check atop the deal as a sweetener. But that’s only what I would do. You should probably seek the counsel of a paid attorney.

  26. When I initially commented I clicked the “Notify me when new comments are added” checkbox and now each time a comment is added
    I get three emails with the same comment. Is there any way you can remove
    people from that service? Cheers!

    • Zuma – Thank you for your interest in this post. I’m sorry to hear that you are having problem with the comment feed. If you read the email alert carefully, you should see an option to unsubscribe from the future comment feed.

  27. My mortgage is in my ex spouses name and mine. The insurance is in just my name. I filled a claim with the insurance company and was sent a check in my name and the mortgage name. The mortgage company side off on the check and then sent it to my ex. They tell me their is nothing they can do. My roof has already been replaced and was 1000 more than the check. The roofing company is expecting their money today and I don’t have it. I would of had the check 3 days ago if it was sent to the right person. The insurance company has made a stop payment on the check but could take days before I’m sent a new one. I believe my mortgage company should send me a check and have to wait for the insurance company to send them the claims check. What do you think?

    • Heather – I’m confused. If the check is made payable only to you and your mortgage company, then what possible reason would your lender have for sending it to a third party?

  28. I had damage to my garage from a car being driven through it in January. The insurance adjuster came out and determined the garage to be a total loss. Wells Fargo is my main mortgage holder. I also have a home equity loan with PNC. I was injured a few years back and was unable to pay some bills while out of work. I ended up declaring bankruptcy. I am in a active bankruptcy at this time and PNC will be discharged at the end of it. I was also two months behind on Wells Fargo when I entered the bankruptcy. I am protected from the late and missed payments under this bankruptcy. I recieved a check from the insurance company made out to my wife and myself, along with Wells Fargo and PNC. Wells Fargo wants PNC to endorse the check and them have me send it to them so they can handle to disbursements.I am afraid that PNC will refuse to endorse the check because of my missed payments. I need to have the garage taken down quickly as it is falling down and ready to collapse any day. I have three estimates on having the garage removed. The amount the insurance adjuster gave us is not enough to have the garage rebuilt. I am currently fighting with them on this. However the insurance company did allow in their report enough money to cover the demo and removale of the garage. Should I ask the insurance company to cover that cost ($3,000) without having Wells Fargo and PNC on the check? I want to rebuild, but I really need this thing taken down before someone gets hurt. Any advice??

    • TD – the fact that you are protected by a stay of bankruptcy should offer you all the protections that you need form your creditors because they already under a cort order not to take any money from you that falls outside of the Bankruptcy Trustee’s orders. Anything outside the Trusteee’s arrgangement could expose PNC, or Wells Fargo to liability which is simply too great a risk for them.

      If you havent already called your lenders to find out what their process is, then you may want to do so at once. It may be not be as difficult as you think. The claim is smalll enough that you may be able to get a bank officer to sign off on it if you have a local branch, the same with Wells Fargo.

      As for tearing down the gargage; if you have chosen a contractor, or better yet, a resoraton company who normally works with insurance companies, they will handle the headaches for you and you simply have to endorse the check once you are satisfied with the work. Otherwise, getting your mortgagees off your insurance claim payment will be nearly impossible.

      Please check back and let me know what you decide to do.

  29. Help we had a house fire.nov 2011 the insurance company investaged the claim for 7month and denied in july 2012. they said it was set on purpose. a butch of hugwash. fire marshal said it was a grease fire from the stove. so in july 2012 we had stop payment on the house. could not afford rent and mortage. We have talked to the mortage company on our policy claerly states this protect the mortgagee interested in a covered building structure in the event of an increase in hazards intentional or crimal acts of or directed by an insured person. but the mortage is not doing nothing. could we go with a forced place insurance. Could we sue mortage company not going after the insurance company please help thank you.

    • Wally– By now I’m sure you have heard the cliche “you can’t fight city hall” but the reality is that you can, but you better be prepared to pay legal fees.

      In your case it is adviseable to at least seek the advice of an attorney who specializes in creditor actions, specifically one who represents debtors.

  30. Hello Ricardo. Thank you for the wonderful information you have provided thus far. I am hoping you can shed some light on my situation. “Superstorm Sandy” damaged my home to the tune of $350k+. Thankfully I had both flood insurance and excess home owners insurance. While the process has been lengthy and required all repair monies coming out of pocket initially, I am now in pocession of a flood insurance check (escrowed and of which I have received 1/3, with an inspection taking place today to determine further disbursement). I have also just received a check for damage not covered by flood policy from my excess policy (Chartis) also written to myself and mortgage company (Chase). The proof of loss attached to the Chartis check states it is divided into 3 amounts:1. flood insurance proof of loss not covered by flood limits plus 2. structural damage not discovered by flood adjuster and 3. decking, jacuzzi and landscape damage loss.
    My question is this: Does it benefit me in any way to hold on to this check and not deposit it until we get the 90% completion mark from Chase which is working off of the Flood POL? I feel if I have completed repairs to that extent then they should just write the Chartis check over to me. Further, I do not believe that my mortgage company should care about my jacuzzi, landscape or decking being repaired (even though it will be). Or am I just deluding myself and I will be forced to create a seperate escrow account and follow the same 1/3 at a time rules?
    Thank you in advance for your time.

    • Heidi – I’m glad that you have found this blog helpful, it is why this thread was created.

      Unless it is permanently installed inside the house or in-ground, under most circumstances a lender will consider a Jacuzzi personal property and therefore it shouldn’t be subject to an insurance escrow disbursement any more than a loss for a TV, clothes or furniture.

      As for the landscape, that’s a bit different and will depend on how your state views plants. Are they emblements or annuals or are they a cash crop? As you can see, it can get tricky.
      However, if you are able to fund the repairs from your pocket without the need of the insurance funds, you may want to consider it because it will make the process much easier. One inspection, one payment, or as they say One and Done!
      Before you decide to make those repairs from your own pocket, be sure to start the escrow process with your lender in order to make sure that you fully understand the process. Also, if you can happen to get your hand on a Chase Mortgage document that spells out the process, I would love to post it here for others.

      Let me know how it works out for you.

  31. Wells Fargo holds the mortgage on the house, My Husband received money from the insurance claim. We are separated and he refuses to fix the house. Can he do this?

    • Michele – It is deplorable to even think that your husband would cause waste to his/your home because of an infantile desire to cause annoyance or harm to you.

      In a word the answer is NO, he cannot do that, not without causing breach of his mortgage covenant.
      Without knowing for sure what YOUR Mortgage/Deed of Trust (security agreement) says verbatim, I can only assume that if you have a conventional, FHA or VA home loan that it contains language in it similar to the one found in the NORTH CAROLINA–Single Family–Fannie Mae/Freddie Mac UNIFORM INSTRUMENT (aka: Deed of Trust) which states the following:

      Property Insurance. Borrower shall keep the improvements now existing or hereafter erected on the Property insured against loss by fire, hazards included within the term “extended coverage,”…Preservation, Maintenance and Protection of the Property; Inspections. Borrower shall not destroy, damage or impair the Property, allow the Property to deteriorate or commit waste on the Property.

      By refusing to endorse the insurance claim check, your husband is doing just that, wasting the property and this is a violation of the terms of the mortgage covenant that he struck with the lender when he borrowed their money and pledged the home as collateral. By definition, this is default and is placing his family’s home at risk of being foreclosed by the bank.

      My advice; grab a copy of your mortgage document, find the area that discusses his responsibility and pledges not to waste the property. Highlight those areas and send him a cordial note explaining to him how you are concerned that not repairing the home in a timely manner could place the home at risk of be foreclosed. If you have a neutral third party who can help you obtain his endorsement of the check, better yet. Otherwise, if that doesn’t work, get an attorney and/or a court order impelling him to do so.

      Please be sure to check back and let me know how this works out for you.

    • My name is belinda. I had a house fire on 11 30 2015. I hired an public adjuster. Check arrived approx. 05 2016. The ajuster will not endorse the check unless i sign a third party authorization for. Is this legal. The.form is optional please help. The ins co.has given me a deadline for the house to get fixed. Or they will cut off my living expense

  32. When I originally commented I seem to have clicked the
    -Notify me when new comments are added- checkbox and
    now every time a comment is added I recieve four emails with the exact
    same comment. Is there a way you are able to remove me from
    that service? Many thanks!

  33. OK, I have a water damage claim. My insurance company made payable a check to myself & wife (borrowers) & to the lender (Mortgage Co). The mortgage co. is Suntrust. Is there a specific strategy dealing with this lender? Or should I call them to disclose my situation and follow their directions?

  34. I find most bankers don’t have a clue how to handle this. So the end result is much inefficient wasted time and the borrower (who may be out of pocket due to repairs already completed) faced with a decision to send the check off to someone they don’t know who sits in a different state or maybe country for endoresment. This after waiting for a long time no doubt, stressing and having to justify a million times over to the insurance company why you should receive the check in the first place.

    My advice is to make sure you have an account with the mortgage bank and simply deposit the check through the drive through into your account. After it clears, transfer it to another bank.

    • Ms. Pritty does a good job of sounding like she knows what she’s talking about, and in the area of a $30,000 fee for a $4,000 I would tend to agree. However, I learned in the rule of supply and demand in econ 101. There is too little labor for the pool of needed work. Perhaps a better idea would be if Gov’s Cuomo and Christie loosened some of their very stringent labor laws to allow some of the out of work construction workers in neighboring states to come into the state to work. The prices would necessarily come down once the available labor came in balance with the size of the available work.

      As for the check cashing scheme, that’s one you ought not try. FRAUD IS FRAUD and the last thing you want to involve yourself in is attempting to cash a two or three party check without all parties having legitimately endorsed them. Don’t think for a moment that your teller in the drive thru hasn’t already been alerted to the fact that due to Hurricane Sandy there are billions of dollars worth of insurance drafts circulating to pay for storm damage. The reality is that any insurance draft presented for deposit will be scrutinized higher than usual and if there is a Mortgagee Loss Payee listed, your bank will likely want a letter from the Mortgagee accompanying the draft before they even deposit it into your account.

  35. I have read several of the Q&A’s above but yet still have a question regarding the Mortgage Companies obligations. Once the consumer has provided all the required document and confirmed with the Mortgage Company that no additional documentation is required – what avenues can I pursue to actually get them to release the funds. My overnighted check and documentation were received and processed on Dec 5th. The roof replacement was completed and all contractor documentation presented at this time. I am not aware if an inspection has been ordered or not becuase I can not get that answer – none of the funds have been released at this point. I have advised them that this is not what their policy states as a standard procedure – still nothing. What can or should I do to get a response.

    • Brenda As you might have guessed, there isn’t really any hard and fast rules about when your lender releases the funds. When a natural disaster occurs, like #Sandy or @Irene, the lender will naturally get overwhelmed by requests to process claims checks. Unlike the insurance companies, who can hire contract claims adjusters or sometimes in the industry called “storm chasers”, the banks have to try to make due with what they’ve got. Even if they could hire temporary staff, it takes time to bring that staff up to speed.

      Although it sounds like I’m making excuses for your lender, trust me, I’m not! I said all that, so that you might have some understanding as to why there seems to be a cacophony of errors and omissions when dealing with your lender. It’s probably something just short of controlled chaos in that department these days. Therefore, my advice is to thoroughly document your plight, dates times, names, etc. When they fail to deliver, or ask for information that they failed to notify you previously, then take the following steps;

      1. If your lender is a depository institution, such as a bank, find the “Office of the President”. That will be the actual president of the entire bank, not just the local branch or region. The Head Cheese, the Big Kahuna, you get the point. Finding this information is as easy as going to Google Finance and searching for your bank name. If you will scroll down below the stock performance chart, there is where you will find the names of all the board members.

      2. Call the office of the president. President don’t like to hear that their good paying customers are getting the runaround and are unhappy and are considering taking their profitable business to their competitors.

      3. Get immediate results.

      I hope this has been helpful. Please check back and let me know how it was resolved.

  36. My name is Jennifer Crespo. My home wass devastated by hurricane sandy.I live in New York. My mortgage holder is Bank of America.
    They are holding my insurance proceeds hostage. The requirements that (meaning holding on to money too long, giving too little at a time, taking too long for inspections, thereby halting work) they have are making all potential contractors run for the hills. Very soon, they will have on their hands a house completely saturated with mold.
    In order to proceed with demolition to avoid a $30,000 mold problem, I wanted to act as my own contractor (being as Bank of america is holding onto the insurance proceeds). According to bank of americas property claims department, the owner acting as their own contractor will not be reimbursed for labor. So, if I were to do my own demo…BOA would not pay…and they would just steal the money that the flood insurance paid out for demoliton. So, either bank of america is stealing or they are just completely ignorant of how counter productive it is to not facilitate mitigating loss.
    I don’t get it.

    • Jennifer,

      If you are acting as your own contractor, and if your loan is in good standing (not past due for any payments) then even though Bank of America will not disburse for labor, when the property has been restored, by law, Bank of America would have no rights to your insurance proceeds because you have restored the property. Bank of America would have no choice but to reimburse your money.

      The key here is to keep your mortgage current and be prepared to get paid for your labor when the job is finished.

      Just out of curiosity, are you a contractor by trade?

    • Lisa makes a good point……the REALITY IS there were many contractors that would only work for ridiculous amounts to do ripouts….if you told them to jump in a lake because they wanted to charge $30,000 for a $4,000 rip out, they simply moved on and found someone IDIOT to pay it. Biggest problem with Sandy is the shortage of realiable contractors available and even they moved on to bigger jobs…. So Lisa probably had no choice but to ask for the help of friends and family to help her with the ripout. After all, what insurance company will reimburse you $30,000 for a $4,000 ripout? That’s why the banks being tight with endorsements are UNACCEPTABLE because they are no clued into the reality on the street. I’m sure over 95% of the borrowers are simply trying to restore their homes which is looking after the bank’s collateral. I say ENDORSE and ask questions later.

  37. Raleighmortgageguy….I am desperate for the answer to pricilla rod’s August 22, 2012 question. Are you still providing answers? Thank you in advance.

    • Pat – In response to Pricilla’s question; Yes. Yes0

      The bank can withhold money from the insurance claim and even the homeowner if the home is in foreclosure.

      Foreclosure is a legal process of taking the homeowners property that they pledged in order to satisfy the mortgage they used to buy/refinance the house. At the final stage of foreclosure, the bank will typically use the proceeds to offset its loss when it sells the property.

  38. My house in on foreclosure with bank of american (fannie mae the investor) i have a bad water damange in my bathroom and walls are full of mold. the walls also connects to neighbors house (closter homes) it has been 8 months since i sent the claim check to the bank for endorsement. all documentation was on point. but they denied to give me the money for repair because the house is on foreclosure. can they do that? bank of america has not helped with foreclosure process i have a lawyer on this case for 2 yrs now on the foreclosure and bank can not provide necessary documents to continue so we just left alone until they take futher action. mean while yes i am rent free. but i need to fix my bathroom. walls full of MOLD is harmful for health – can they still hold the money??? my insurance is on time. i pay for insurance. this does not seem fair. if neighbor house becomes damaged because i didnt fix mine, whos fault is it??? i blame bank of america because citizens paid right away!!! HELP

  39. I came across your blog and since I find myself at the mercy of my bank with regard to funds from an insurance claim, it holds particular interest. While you make some valid points, I think you are missing the big picture. I live in South Florida and I bought my home in 2007. While my home is not underwater, I am certainly treading water. I have never been late on a single payment. Three years ago, I had a fire in my home. There was little damage but it was a big claim because I discharged a fire extinguisher and every single surface in the home was covered with a fine powder. It cost about 50K to clean and paint the entire home. The bank did not hold the funds in escrow and they inspected the property and were more than satisfied. I spent about another 50k above and beyond the settlement on the home over a year and a half. This year I had a pipe that runs in the concrete foundation of my house spring a leak. The result was a guest bedroom and the ensuite bathroom I had just completely redone suffered damage. I spent 8 months fighting my insurance company for settlement. Initially they offered about 13K and sent me a check for that amount. The bank endorsed it without problem and I cashed it. I had to pay the public adjuster and I paid a small plumbing bill to cap the leaking pipe and a mold testing company. To make a long story short, I had to file a Civil Remedy Notice and threaten a lawsuit until the insurance company ponied up. My policy, which costs me 8K a year, calls for full replacement. The 13K was for an alternative that was not satisfactory. It also did not include mold remediation. When I got the balance of my funds which were 88K, the bank had me endorse it, got on the phone, pretended to deposit it in my account and then told me it was put in escrow. Here is the situation in a nutshell. The second check for 88K, that Chase holds will not even be doled out in thirds. They are sending me a big fat zero. Why you ask? Because the check for 88K includes mold remediation of 12K. The bank insists the mold remediation take place first before any other funds get released. Since I received an original check for 13K, I get zero until I do the mold remediation. Two problems. The first check did not include mold remediation because the insurance company initially denied that part of the claim. Second, I have to fix the plumbing before I do the mold remediation. The plumbing runs in the affected area and new pipes have to be run before the wall can be replaced. You get the picture. The plumbing bill will be about 18K. So the bank expects me to pay for this out of pocket. When the plumbing and the mold are addressed the project will be about 90 percent done. In other words, those two issues are the bulk of the problem. I go from zero to ninety percent done in about four days. The issue is that the bank is forcing me to essentially pay 18K out of my pocket before they will consider releasing a dime. Here is where I think you are wrong. You speak with the attitude of a banker. I understand full well that the bank has a interest, but to be honest, as long as I always pay my bills and I live up to my end of the bargain, the bank shouldn’t have a say. The bank doesn’t pay my insurance. I do. They don’t negotiate a rate or choose an insurance product to suit themselves. I do. They didn’t help me while I battled the insurance company to protect my investment or the bank’s interest. I did. They didn’t offer to become an interested party in my lawsuit against the insurance company. I did it alone. I have always paid my bills on time. I have lived up to my obligations under the terms of my mortgage agreement, so why is the bank treating my money as though it belongs to them. It doesn’t. I shouldn’t have to jump through hoops, wait for them to inspect and release, nor especially be out of pocket one dime, when they are holding my money. This is not a construction loan. Also, I don’t think the bank has the right to say that a public adjuster cannot be paid when the check was endorsed to the PA and his signature was required before the funds could be endorsed by Chase. The PA required me to write a check for 8.8K for his portion of the proceeds. His agreement is that he gets 10 percent of the total. He has done his work, his signature was contingent on being paid. As for attorney fees. The statute provides for attorney fees, so they can’t collect on a contingency basis, so that is not applicable here in FL. My point is, the bank has a remedy for people who do not complete the repairs and devalue their interest by skipping out. It is called a lawsuit. I for one, will go along with this game the bank is playing for about another week. First, I will send a nasty letter from my attorney. Then I will file a complaint with the CFPB. If that doesn’t yield results, I will sue them. Most of the people here on this forum need to consult a lawyer. BTW, they should have to pay me interest. It is 88K for God’s sake, and here in FL, escrow accounts are supposed to pay interest.

  40. Dear Sir,
    Do you speak English? Not ‘mortgage-ese’ but English? I don’t need some re-iteration of the ‘mortgage-ese’ that’s on the documents but a simple, straight forward explaination. I’ve paid to repair all the damage done to my property out of pocket assuming I could cash the check my insurance company sent me and now I am overdrawn because Wells Fargo says I have to sign the check over to them and they will ‘disperse’ it. Until then, I am broke – can’t pay my bills. can’t pay for food, can’t pay for gas – because I can’t cash the check written TO ME by my insurance company. What am I supposed to do?

    • Pat – As you can see, I speak English very well, thank you for asking. That said, who are you angry at, one of the biggest banks in America, or yourself for believing that you could trust what you were told was accurate? Seriously though, I am sorry that you find yourself in this predicament, but it shouldn’t be all that bad. If you are current on your mortgage, and if the work has been completed, by licensed professionals, if required by your state, then your lender should have no problem endorsing the check and releasing the funds to you if you have already paid the contractors. However, as you can see from the dozens of comments before yours, dealing with super big banks isn’t always easy or straight forward.

        • Pat – in that case, that is, if you are able to repair your home and return it to its pre-disaster condition for less than the insurance claim expect your lender to withhold any excess funds from your settlement in order to bring your loan current.

    • Pat, check with your local city to see if they have a program as my city does where they give an emergency mortgage payment to bring a homeowner in hardship who will be able to make good on future mortgage payments. Whatever you do, don’t let them lull you into foreclosure on that missed payment. As some time has passed since you post, I hope you were able to get your food taken care of—any one else in that spot, that is when it is time to ask family for food help, and then to visit a dollar store that has food if you have one locally as I do where I can buy frozen meals for $1 which helps when money is tight. I would say go to a local church, but that is such a generic line that often does not result in help as I learned myself long ago. Though you can try emergency food help search on the internet for your local area. Unfortunately the mortgage company and banks just don’t care if they overextended your budget by their payout games.

  41. My home and buildings recently suffered some pretty major damage resulting from a hail storm. My mortgage company “Coldwell Mortgage” is listed as a payee. I called them today to determine the process of getting the mortgagee to endorse the draft. They advise they will send me a packet that I will need to fill out, which I’m fine with. They advised I MUST hire licensed contractors to make the repairs. I advised I plan to do many of the repairs myself in an attempt to do some upgrading to my property with the insurance proceeds. They advised I am only allowed to do “painting”, “landscaping”, “carpentry”, and “fencing” repairs myself. I asked them how they can dictate who does the repairs to my home. They advised this is their process and it must be followed. I asked them to send me the documents that give them the authority to dictate who makes the repairs to MY property. They advised they have an interst in the property; therefore, they can dictate whom I hire to make the repairs. I have a real problem with this. I am, and always have been, current on my mortgage. I financed the home 4 years ago, and have since paid down the principal by $60K. When I took out the loan, I paid in excess of 20% of the appraised value so as to avoid mortgage insurance. Based on the appraisal of the home, I own more of the property than the mortgagee. They quote “clause 5” of the mortgage contract which indicates they have the right to “oversee” the repairs. Apparently their interpretation of “overseeing the process” is to dictate who makes the repairs. Can they do this?

    • Andrew While your mortgage contract contains broad language that gives your lender the right they are asserting, it is your state laws, not your lender who establishes who must be licensed to do certain types of repairs. The only exception I have seen to this would be in cases where there homeowner is licensed to perform the repairs, such as, plumbing, electrical, etc., however, because they were delinquent in their mortgage payments, the mortgagee refused to let them act as their own contractor.

      If I were you, I would push back and ask for an exception from management. Use the same argument that you posted here. If that doesn’t work, hire a lawyer to write a demand letter.

      • I will do as you say. Hopefully, they will use some common sense and start treating me as a valued customer. The service that you are providing here is outstanding and remarkable. Thank you!

  42. We are behind on our mortgage and upside down with B of A. We recently sustained considerable mold/water damage and must repair it. We have State Farm who is saying the check will be made out to us and B of A or A contractor and B of A. Can B of A hold that check until we are current on our mortgage? If so, and we cannot live in the house the way it is, not only will we lose the house but they lose too, because it cannot be re-sold in its’ existing condition.

    • Bari – There’s good news and not so good news. The good news is that BOA, or any mortgagee for that matter cannot hold your insurance claim funds until you are current on your mortgage because by doing so they could be jeopardizing both the livability and the repair-ability of the home. The bad news, as you might have guessed, because you are delinquent in your payments, Bank of America (or any lender for that matter) will require you to jump through additional hoops in order to get access to your insurance funds. For example, there is not a snow balls chance in you know where that they will allow you the homeowner to have access to any of the funds to repair it yourself. Additioanlly, if by chance you happen to come in under the estimate of repairs, they will not give you the extra money, even though it is yours to keep if the house house been repaired to the pre-disaster condition. However, if you do have funds left over, the good news is that they will apply it to your loan in order to help you get current on your payments and fees.

      I hope that helps and best of luck.

      • Hello, I have been reading all these posts and see that there are so many people in these situations that we as homeowners feel trapped to say the least. So here is my situation……we own a home and mortgage is through ASC which is affiliated with Wells Fargo, we pay the homeowners insurance seprate out of pocket as it is not included in the mortgage, about 6 months ago we were fortunate and able to purchase a second home due to our growing family and needing more room. However we did not want to be nasty and walk away from the old home since keeping good standing is what helped us to get second home, so we decided to rent it out to cover the mortgage so we are not burdened with both, recently we had tenants and a pipe broke causing complete flooding in the home, we called insurance and they claim adjuster cam out and we processed claim and they sent us a generous check to get work complete and home livable again as the tenants had to leave since its not livable at this time. seemed easy enugh untill we recieved the check and our names and the mortgage company is on it and it seems like we have to jump through hoops to get the money to get repairs done, they stated we can submit a request for exception for them to endorse check and send it to us to be responsible to get repairs done and do what we may with check, however in your experience how often is this so called exception made? and if it is not, they want to disperse check in 1/3 increments in which we dont have extra money to pull out of our pockets to start this work and wait for them to disperse money, in the mean time the house in Florida ( hot weather) is only getting worse sitting there as mold which was not included in claim is probably setting in and we want to get it done to get renters back in as we will not be able to pay both mortgages…..what would you advise?

        • Hopeless in Florida – Like so many of what I like to call “Sell-Lords”, those who because of market conditions, chose to rent instead of selling their home, you have discovered the hard way just how difficult it really is to be a land lord. Being a land-lord is harder than just screening tenants and collecting checks. But before we get to your problem with the insurance check, let me address your comment because it is noteworthy, if not unrelated;

          [We did} not want to be nasty and walk away from the old home since keeping good standing is what helped us to get second home…”

          For the record, keeping your word is more than simply not being “nasty”, it is in fact what a civil society is built upon. Although there are many people who recently have had no choice but to surrender the deed to their home, it’s often not about being nasty, it’s about being able to feed and shelter their families. My heart goes out to the millions who have legitimately lost their homes, not simply walked away. Keeping a promise to pay, when you can, even when it is no longer profitable is always the moral and right thing to do; we need more people like you, people with depth of character; keep doing the right thing because it’s the right thing to do, even when it’s not profitable, these things always have a way of working themselves out if you get my drift.

          Now that I have climbed down off my proverbial soap box, let’s address your nagging issue of your water damage, a great big old insurance settlement claim check and a pesky little thing known in the business as the “mortgagee clause”. Of course, you already know why the mortgage company can hold your claim check, but what you really want to know is should you trust them to waive that right and how likely it is that they would do so.

          However, this is also a good place to point out for posterity why lenders require six (6) months cash reserves (liquid or fairly accessible) PITI for new investment property mortgage loans just for this type of event. Additionally, if you haven’t already changed your policy from a standard HO3 Homeowners Policy to a more appropriate Landlord Policy, you should do so just as soon as it is feasible. It may cost slightly more than what you are paying now but it is well worth it because not only are you not paying for content coverage, that your insurance won’t cover anyway, but it will likely include rent-loss coverage just for this type of circumstance. This will also protect you from having your policy cancelled or worse yet, a claim denied due to false representation.

          They stated we can submit a request for exception for them to endorse check and send the to us to be responsible to get repairs done and do what we may with check…

          The million dollar question is should you send your mortgage lender the insurance claim settlement check and trust them to grant the exception to their policy. Because my lending experience is limited to origination and not servincing of loans, in my 15 years as a mortgage lender, I have never seen that happen. That’s not to say that it couldn’t happen, but rather it is rare. More rare these days is a lenders willingness to make exceptions, but that doesn’t mean it couldn’t happen. Some of the things I suspect that would need to be considered for an exception to be granted are:

          1) How many late payments have you made during the past 24 months?
          2) Have there been any NSF or returned checks?
          3) Does the lender know this is a non owner occupied house?
          4) What is your present loan to value ratio and how does that compare to your original loan to value (Loan to value is the amount of the loan as it compares to the appraised value of the home, an 80,000 loan on a home appraised at 100,000 is 80%-LTV, etc.).
          5) Finally, what type of loan do you have, is it FHA, USDA, VA, Conventioanl or Non-Conforming?

          All of these are likely questions to be considerd and any one could be reason to deny the exception.

          …Including ordinary people and priests, slaves and slave owners, buyers and sellers, lenders and borrowers, the rich and the poor.- Isaiah 24:1-3

          The bottom line here is that there is no legal way for you to cash this check without your lenders endorsement, therefore, regardless of how you or I feel about it, you have to submit both the check and to your mortgagee’s policy on how they handle those check’s. The bible says the debtor is slave to the lender, and this is a classic example of what it means to be under the authority of another. Personally, I wouldn’t lose another moments sleep over it. Find a contractor, preferable a Restoration Company who will work with your mortgage company, under their terms and more importantly, one that will issue you a certificate (that you will keep forever in a fireproof box until you sell your home) that will certifiy the mold has been remediated. Don;t worry about the mold. Although it wasn’t originally part of the claim, it was caused by the water damage, so just call your agent back to revise the claim.

          I’ve really enjoyed answering your question, please check back with me and let me know if they granted the exception, because you’ve got my curiosity piqued.

          • Thank you for your reply, You are so right about many who have had to walk away and I never ment that in terms of them being nasty, but thanks for the correction, some really just have to make a difficult decision based on whats best for their family. And I enjoyed your quote from the Bible as I am a strong believer of God`s word. I will keep you posted on this exception, we should have an answer by Fri this week. I highly doubt they would grant it either, but we will see, and if not will deffinetly go the route of restoration company. Thanks again- Erin

      • I just had the same situation with Citimortgage. I was told to submit a signed contract for the repair along with a number of other forms and to endorse the check and mail it to CItimortgage. I was told that they would then issue a check for 1/2 of the proceeds made payable to me and the contractor and they would release the remainder of the money to the contractor when the job was complete. Today I was told by Citimortgage that they would be keeping the money until I became current with my mortgage (it is six months past due and has been sent to an attorney for foreclosure although the foreclosure process has not started yet). Can they do this? The first floor of my home has extensive water damage with the floor being ripped up and some of the sheet rock being removed. The insurance company already paid for mold remediation and clean up directly. Do I have any recourse to get the repairs done? I don’t expect them to give me the money, I just want to get my house repaired.

        • Help In New York Once you have defaulted your mortgage and an attorney has become involved, as you know, things get very complicated and expensive. First, let me be clear; I am NOT an attorney and therefore please do not act on any advice you receive from me witout first consulting, and paying for legal advice from a attorney who is licensed to practice law in New York since presumably that is where your home is located.

          Now that I have covered my backside, it is dubious to me that although you still own the home and foreclosure proceedings haven’t yet begun that they would have the right to withhold your insurance claim payment and prevent the repairs from being made to your home in order to restore it to its pre-disaster state. Once a legal foreclosure process has begun, or if your lender has charged off the loan as unrecoverable (as in the case of another reader on this thread) then all bets are off and the lender can keep the money to offset their loss or anticipated loss.

          However, it sounds to me like you intend to keep your home and want it repaired. Therefore, my advice is fight fire with fire; hire your own attorney and demand that they cover his/her expenses for forcing your hand. Remember, this is still your home and the bank has no right to prevent you from repairing and preserving your home simply because you are past due. In fact, your mortgage or deed of trust actually requires you to keep the house maintained. Therefore, the banks actions are preventing you from repairing the house because they are withholding your insurance claim funds, and so in essence it is forcing you into a technical default, in addition to your default for nonpayment.

          Hire that lawyer fast, it will be worth the couple hundred bucks they charge and you should be able to get it knocked off what you owe the bank.

    • Bari how did it work out for you? I’m in the same position with the same bank and ins company.

  43. My mortgage is with Sovereign Bank, I sustained two major damages from water/roof. I hired a public adjuster, the 2 claims were approved and the 2nd one is still on going. The first claim is finished but Sovereign is holding the funds…for what reason I don’t know…I have borrowed thousands of dollars from family and friends to complete the 1st claim and I have been telling everyone as soon as I get the insur money from Sovereign I will pay you back…it’s been 9 weeks..I went thru chapter 13 in order to save my house from foreclosure and have been paying the trustee every month for 11 months..the insurance co. cancelled the coverage after the 2 claims and now the mtg co added their homeowner insur. because I can’t find any insur co. to insure this house with a ceiling caved in and mold everywhere in 1/2 the house…its been like this for months…the first claim I lived on a concrete floor for 6 months waiting for this insurance money which they are still holding…thankfully family and friends loaned me money to get that half of the house done…anyway, if Sovereign bank wants me to repair this house i need that money to pay everyone back and start the other half of the house…no one can live in mold and no carpet…they sent their inspector and they can see the 1st claim came out beautiful….the plan is to get this house on the market so I can sell it…but how can I do that if they refuse to give me the insurance money…who does this??/ it’s their property too, don’t they want it restored so I can sell the house?? Help please

    • Laurie – You need to hire an attorney immediately! Your lender doesn’t care and nothing will get their attention faster than a letter from your attorney. It will cost a couple hundred bucks, but that’s pennies compared to what you are paying each month and the force placed single interest insurance your lender is charging you. Good luck!

  44. I have leaders base insurance thru on my rental property and had a lot of wind and water damage to the home.
    My lenders based insurance company is holding a check for $6,996.00. The repairs from 2 different contractors
    was are over $14,000.00 and $15,000.00.
    I cannot afford the difference to have repairs done and the insurance company will not come up any $$ on their
    claim. This all started in May of 2011. I can’t rent it because of the damage and mold and mildew. I stopped
    paying my payments in July 2011 because of this situation and I can’t make them with no renter. I have asked the
    claims department by letter to appy this $6,996.00 to my loan and have sent them 4 different letters of intent saying exactly what they coached me to put in these letters. I get no action. Now when I call my mortgage company and or claims depaertment and punch in my account number and it sends me to MY ACCOUNT MANAGER who will NEVER
    call me back. It is like I have been black-balled. In the mean time my credit goes down the tube because I can’t pay these payments and they won’t call me back. I tried to do a loan modification and they said they did not offer it on
    renal homes. I called their Deed in Lue department and I am working with them now. They even called the claims
    dept and got the same reaction as I.

    • Richard – this is a lousy situation indeed. It sounds to me like there are a lot of issues converging at once. It sounds like your insurance has lapsed and your lender force placed insurance on your home, is that correct?

      It also sounds like this is an investment property that you cannot afford to own without the cash-flow from the renter, is that also correct?

      If your answers are yes and yes, then I recommend two things;

      1) You need to hire a lawyer to review your lenders force placed insurance policy because it sounds like you have been sold a very expensive policy that the lender likely has an affinity relationship with the insurance company; meaning they earn commisions from the sale of that very expensive policy that only pays out 50%.

      2) You need to have the same lawyer send a letter to the mortgage company regarding the deed in lieu you mentioned. You might be surprised to learn that some mortgage companies are actually paying mortgagors like you for their deeds. I hear that in some cases they can be as much as $5,000!

      Spend a couple hundred bucks on a lawyer, it will be money very well spent!

  45. No Ricardo, my goal was to see if you would respond and if so what that response would be in-order to determine if I would ask for your advice. Sorry for the strong words, now I know I can trust you.My loan was sold to BOA and it is a Fannie Mae loan. We have a 56% LTV ratio . I have sent them the adjusters report and a copy of the check with a request for a single payment disbursement . My total claim with recoverable depreciation is about 50K, so far I have received $9200 for emergency repairs made out to me only, 3K made out to me only and 29k to me and the mortgage company. It breaks down to about a 50/50 split between dwelling and other structures.Please advice me on how I can speed this process up. Can I take this check to our local BOA branch and ask them to endorse it? You are correct in the fact that I am angry, with 50% equity in my home I feel the mortgage company is putting undue burden on me and over reaching in the name of investor protection. Again sorry for the strong words, please accept my apology.

    • Randy – you are right to be angry with Bank of America. Right now I am having my own personal struggles with Bank of America who are calling to collect a debt for $78,000 that was forgiven by way of short-sale. Read more here.

      Unfortunately you are are not going to find an easy route because of the amount of the claim, you will have to go through their escrow department. Here’s my advice; send everything via overnight courier and keep copies of everything you send them because they will try to tell you they haven’t received that which they have. If they hesitate or start playing games, be prepared to have a lawyer fax a demand letter. This may cost you $100 but trust me when I tell you, it is worth it! One last thing; whatever they ask for, just do it, they hold all the strings since they hold the money. Once you have completed the repairs, go visit your local credit union or community bank and tell Bank of America to take a hike!

  46. I wonder how many b/c,no doc, adjustable rate loans this guy and his company made back in the hay days. Did you disclose this investors rights crap to those you made loans to. Did you bundle and sell those loans on the secondary market to “investors” who have changed their “policy” on how claims are handled. I have better than 50% equity in my home and damage of less then 25%. I cant see for the life of me how the investor is at risk of asset loss. All I can see is a bank (secondary buyer of my note and not of my choosing) using my insurance money as a way to fluff their books. You talk of property right, what about of my equitable rights. This is not a one policy fits all type of thing. I can see an investor needing to make sure repairs are done if that is needed to secure the value of the asset to point of their interest but if it is beyond and their money is safe then its just an invasion of both my property rights and equitable rights. bet this post won’t make it to your thousands of followers.

    • Randy, thank you for your comment. During the height of my career in personally funded more than $18 million dollars in a market where the median house price was just over $200,000 yet the median loan was only $144,000 (do the math; that’ s a lot of loans!). As a result, very few of my customers used b/c loans to qualify. In fact, 5% or less of my portfolio was comprised of non-conforming loans; a figure that its in line with national numbers. However, that’s not to say there wasn’t plenty of loan officers offering only sub-prime loans, it’s just that I wasn’t one of them.

      That said, it sounds to me like you’re having some personal trouble with your lender over an insurance claim. Do you have a question for me or is your goal to impress my readers with your anger and insignificant assumptions about my work history?

  47. ok this ones is a little tricky but i will try to put much detail as i can and try to keep it short. I had a large tree fall on my garage and carport during Hurricane Irene. Over the course of 2 months the insurance company had to send out 3 different adjusters to get their paperwork straight. The first two adjusters TOLD me that the foundation would need to be replace due to cracks. The third adjuster was to inspect parts of the house that got damaged (gutters,siding etc).

    I went to planning and zoning to get a permit to rebuild the garage and they told me since my garage was only 2 feet from the boundary and my neighbors property was considered a wetland I could not rebuild there( i have a witness). So I got a permit to move the garage forward within the required limits. I got my first draw and i paid a contractor to pour the foundation and block. Now when i called to get my second draw to frame it the mortgage company said that the foundation was not on the insurance report and they would not give me any more money. I called the insurance company and they said if i got paperwork from planning and zoning saying i couldn’t build they would cover it. So i go back to planning and zoning and they tell me they will not get me anything because i could have applied for a variance which they did not tell me the first time. Now I’m stuck with half built garage and nobody wants to help.

    Should i finish it with my own money and then try to get reimbursed? Or should I take another route??


    • Merl – Yours is yet another example of overreach by local county & municipal government to the detriment of private property rights which are slowly eroding American liberty.

      That said, I do recommend you complete your garage, because it sounds like you have grown accustomed to it and you expect a certain amount of value to be subtracted from your home if you don’t have a garage. That said, I think you need to have your attorney fire off a demand letter to your lender. Nothing gets a lender moving faster. Sure, it costs $150 – $250 but you would be amazed at how well that will grease the skids.

      Finally, let this serve as a civic lesson, it’s time as Americans that we stop being apathetic about government and its role in our lives. If they can tell you how you can or can’t use your private property, what else can they make you do?

  48. I think it should be unlawful that a mortgage company be able to keep interest earned on an insurance claim check that has a three party endorsement (husband/wife/mortgage). Shouldn’t that money be put back into the homeowners escrow account and be used for the homeowner? That would be like me keeping some of the money from the insurance claim reimbursement rather than using all of the money toward repairs, isn’t it? I think that if a mortgage company has this right then they should pay taxes on it. Isn’t that a form of income?

  49. My cousin has an insurance claim money but he has no plan of sending it to the mortgage company at this time since he is still unsure and overwhelmed with so many paper works that was done before and to be completed again before getting the money to pay for the repairs. Can he claim the money on a much later date? He is tired and drowning in frustrations… What will happen to the insurance claim money?

    • Luis – I assume that if your cousin repairs the damage himself, once his mortgagee has been able to confirm the work has been done, and paid for, and his mortgage payments are current, then they would send him a check. He will, however, still have to send his mortgagee the check because they will have to endorse it, deposit it into escrow and follow their procedures.

      I hope that has helped.

  50. I’m a Wells Fargo Mortage holder who experienced sever water damage from hurricane Irene. I’m caught in the middle of city and county mandates to either elevate, demolish or re-locate my home. My City building inspector will not issue permits to a general contractor to do the repairs unless one of the aforemention are done. Ergo, I can’t get a general contractor to bid on the work, or provide a W9 form as requested by Wells Fargo.

    My home, along with about 20 others in my small subdivision have been uninhabitable since August 30, 2011. NFIP does not pay for loss-of use. I’m steady paying my mortagage and not able to live in the home.

    It’s truely a travisty. Home value assessed and mortgaged at 140K in 2009. Claim loss 48K, porbably elevation cost minimum 35K. I can’t justify in my mind putting 75K into a home that in today’s market might sell in the area for 120K after repairs. Tax value of home is only 99K. I’m the one paying the mortgage, taxes, insurance and flood insurance.

    My questions is: Can’t I be bonded to have the repair work done on my own. I’m not a flight risk, I’ve paid my mortgage consistiently, I have equity in the home?

    I’m sitting on my insurance claim settlement as I don’t know which way to turn with the mandate to provide a gnereal contactor’s W-9 form.

    • DD – Your circumstances are unusual to say the very least. It sounds like you say, you’re caught between one bureaucracy and another but it sounds like the one that is the real problem here is your local zoning board. Before I can advise you I need to know;

      1. Have you requested a variance from the zoning board?
      2. Was this elevation ordinance placed in effect before or after you both the house?

  51. I have some roof damage and was issued a check to me and mortgage company. I have called in 3 contractors to give me an estimate on it. They are doing this today.
    I haven’t deposited the check yet so I am not sure if my bank will deny depositing it. I have asked friends and they had no issue depositing a check into their checking with their mortgage co. on there too. My question is, I work in architecture, know lots of people and can possibly get discounts. I want to just fix this with who I pick based on best estimate, be done with it and pocket the savings I get from using my network.
    I have read other responses about lien holder and their rights and what not, but my work is a cut and dry reroof…they gave me 6200 to get it fixed and I priced it around 3500-4500 to replace….getting the mortgage co involved seems like it will just hurt me when I can get this done really fast and everyone paid and walks away happy. What issues will I run into?

    • my situation as well Lee and I do not trust BOA to do right – after all they can’t even get my servicing right i get $5 checks back from them all the time saying i am not making my right mortgage payment when in fact that $5 is their online fee to make the stupid payment. I had a contractor contact me, I do not think i had much damage (hail) but these people were swarming the neighborhood after a storm and racking up the business so i let him come look. I did not like the way he acted much and it didn’t feel right, my adjuster said i did not have to go with them to be sure i trusted who i used bla bla, and that i also didn’t have to do the work now (it was winter time albeit a very light one for us) could wait until spring so that gave me some relief, as I had to wait on coming up with my high deductible anyway. well now i find that the insurance co sent me a check out anyway in december, (my mail piled up during care for family member – pay all online so no i don’t look at it much – it’s usually junk mail) so i just found it – but hey it’s just now spring lol anyway i guess claim needed to be settled/done/paid out by then it’s not alot (around 3k) but I would prefer to just fix the things myself (fence, lightening struck tree, windows) the roof still has near 10years left on it and there are no leaks at all and I am making myself sick wondering why we can’t just put for deposit only to within named payees but with it payable to us and the bank of course i don’t know if they will just endorse it over to me being that low of an amount or keep it and disburse as they see fit which lord knows what or how they will do with that service and I don’t have extra money to do the repairs and wait on getting reimbursed I need the money from this check to buy the supplies to fix the things and be done with it but like you I wonder what issue will have such as of course the check coming back for endorsement and its drawn on boa as well — oh great….What would happen i wonder in my case if they don’t just endorse it, because if they won’t i won’t then I will just send it back to the insurance company and tell them cancel the claim then.

  52. You could certainly see your skills in the work you write. The world hopes for even more passionate writers like you who are not afraid to mention how they believe. At all times follow your heart.

  53. I had a roof leak from a storm a few weeks prior to Hurricane Irene. When I received the insurance check I overnight-ed it to Suntrust mortgage and I was told by 4 separate employees that 1/3 of the funds would be sent back to me 48 hours after they received the check.

    Time was of the essence for me-because Irene was approaching and I needed to do emergency repairs before the storm hit. The check came to me 9 days after Suntrust Mortgage had received it (8 hours before the storm hit) NOT 3-4 days as they promised.

    Of course I now had more damage due to the Hurricane because the funds were not available to me on time. I was also initially PROMISED by several employees of Suntrust that after completing 50% of the job they would be sending me a second check for 1/3 of the insurance proceeds.

    The inspector came and told me she was going to report to Suntrust that 65% of the work had been completed. Suntrust somehow changed her estimate to only 45% done. Either way, of course Suntrust computed to their favor and sent me a check NOT for 1/3 as promised but for only 45% of the insurance proceeds. Now I have 2K worth of roofing materials paid for out of pocket and no funds to repair the roof.

    Suntrust Mortgage did NOT deliver what they promised!

  54. I have an important and legitimate question pertaining to your article.

    Hopefully the borrower won’t need to resort to posting their stories on the internet. However, if a person wishes to retain some sort of anonymity on the internet, how does the lender’s marketing department know who they are?

    Obviously you’re not going to give your full name or address on the internet so how do they know it’s you who posted the complaints? I can understand if they would message you on the host site to attempt to identify you, but what then? Alternately, if a borrower wishes to employ this tactic, does he need to disclose his full name on the interwebs for the world to see so it’s enough “bait on the hook,” so to speak? If so, how much information is enough and how much is too little?

    I’ll check back here every so often because I’d really like to know about your knowledge and experience in the matter.


    • Tom – Thanks for sharing your thoughts and suggestions with my readers. When a comment is replied to, like for instance me replying to you, the reader is notified directly – I can only assume that one would practice prudence when posting personal information to the Internet but just in case, I moderate all comments before approving them to be posted. Don’t underestimate the power of Social Media.

      When I worked for Suntrust Mortgage we had an entire department in Atlanta whose job was to troll the web looking for comments and when they were legitiamte, they acted. Of course we all know that 3% of the population is just nuts and cannot be pleased, but for those with legitimate complaints, they were addressed post haste!

  55. I am a contractor who did work on a home where Wells Fargo holds the mortgage. The homeowner refused to pay and I won a court judgment against her. The insurance company issued a check for the repairs with my name, Wells Fargo, and the homeowner all on it. My problem is the homeowner is now in a hospice and I can’t get anyone from Wells Fargo to even talk to me about it. The check can’t be cashed by Wells Fargo, but I can’t get my money, either. Is there any way you can advise to address this?

    • Audrey Oh man – yours is a very tricky one indeed! It appears that you have a three party check and one of the parties was unwilling to pay you; before I can even think of an answer I need a few more details;

      1) Who is in possession of the check?
      2) Did you obtain a Mechanics Lien on the property or just a general judgement?
      3) Are you aware of a Power of Attorney assigned by the homeowner?

      • Wells Fargo now has the check. I did not get a Mechanics lien on the property because I am not a licensed contractor. It was more of a deal of helping my neighbor, but we signed contracts to protect each other. (I thought) The homeowner is the type to die without allowing anyone to have any of her authority over issues, so I doubt there is a Power of Attorney. To make things even more difficult, the home goes up for a Trustee Sale on November 18th. If I read the deed right, does she give up her rights to the money once the home sells, which will allow for Wells Fargo to simply pay me? Also, would it be a criminal issue, possibly theft, if Wells Fargo refuses to pay me since my name is on the check and they have no legal rights over me? I am pulling my hair out!

        • Audrey Because of the lack of a written or express contract and because of all of the potential pitfalls and opportunities for you to lose your right to collect the money which is owed you my advice: Consult an attorney in your state who is well versed in contract law because although you didn’t have an Express Written Contract it sounds from what little you have shared here that you had what is known as an Implied Contract meaning you weren’t donating your time and materials to your neighbor but rather both parties knew you expected to be paid for your services.

          Good luck and please chack back to let me know what your attorney advises you.

          • Actually, I guess I didn’t explain it well enough because we did have a formal contract. I emailed Wells Fargo executive offices and it seems as though a “specialist” has been assigned to look into it all. I will have to let you know if I actually get a call back.

  56. Wells Fargo Home Mortgage is also my lien holder, not by choice but by my loan being resold. Anyway after finally settling with the insurance company they sent us three separate checks. One for personal items with no bank name on it so that was no problem. The second check was suppose to be a advance to be issued in 48 hours for water mitigation and repairs already done and paid for. We received this check 7 weeks later with the other two checks and with the bank name on it even though this work was done and paid out of pocket. The third check was for dwelling repairs and has the bank name on it also. Wells Fargo would not endorse the two checks because they totaled over 15,000 dollars. After sitting at the customer service desk at my local Wells Fargo Bank for three hours we finally had the insurance company fax a letter to Wells Fargo stating the “advance” check was for work paid and with that they endorsed that check. That leaves me one check for $10,320. that they won’t endorse. As I see it they should not look at the ‘advance’ check combined with the dwelling repair check and I would be free to cash that check and pay the contractors that are working in my basement at the moment hoping that I pay them.
    Its hard enough to deal with having your home damaged, cleaning up, then FEMA, then the insurance adjuster and finally after two months getting a check only to not be able to cash it.

    The question I have is if I paid out of pocket to have all the repairs done will the mortgage company come look when its all done and then just endorse the check to me??? I am not comfortable with handing the check over to them as I have more then once in my life got short changed by insurance companies and I am afraid of this playing out the same. My loan is current. Our credit is good.

    This process is not fair to the honest home owner and something should be done to correct this. I understand the bank has an interest but they should not be in “CONTROL” They trust you to borrow $450,000. for a mortgage, they trust you to take care of the home over the course of the years you have the loan. BUT they don’t trust you to repair your home when you get $10,000 or $15,000 insurance money??? Does that sound right??? What next?? Will they want to come to your home once a year to inspect it to see its being taken care of and not getting run down?? After all they have a vested interest.

    Thank you

    • Lorraine Unfortunately your story is not unique because there are literally thousands who are in your same position. I am however glad to heart that you only sustained property loss and no loss of life!

      Your Question;

      “If I paid out of pocket to have all the repairs done will the mortgage company come look when its all done and then just endorse the check to me???”

      In a word; YES. Wells Fargo like any other major U.S. institutional bank only purchases mortgage loans from investors who use uniform mortgages (security instruments) which conform to state and federal consumer protection laws that will protect their security interest and like pointed out earlier in the original post here those agreements that you signed allows the lender to reserve the right to make final inspections of repairs made to the house and any OTHER changes you make to the house that changes it from its state when the loan was made.

      If you have already paid for the repairs and your loan is current as you state then you have no reason to feel uncomfortable about sending your lender the check for endorsement they.

      Your lender is the greater party (mortgagee) to the two party agreement you made when you borrowed their $450,000 and so they have a greater responsibility to adhere to the terms of the that agreement that you the lesser or mortgagor because it is the mortgagee who is granted all the rights to act in order to protect their investment.

      Finally it appears to me that you distrust of your lender is unwarranted given that it seem your new lenders, Wells Fargo has in fact complied with all of the other terms of the agreement you made with your original lender, i.e.; I assume they haven’t changed any of the terms of your original loan without your permission, right? In other words they have honored all of the terms you agreed to as set forth when you agreed to the loan and subsequent mortgage right?

      Send them the check , let them make a final inspection and you’ll likely have your money back in time for Black Friday shopping.

      Thanks for the great question!

  57. What happens if you get your work completed, and have extra insurance money? Can you use it for other repairs? We are having to replace our wood floors due to water damage, but were thinking of getting laminate now instead of hardwood. If we have extra we want to put new carpeting in our upstairs. Can we do this? Will the mortgage company take our extra money?

  58. We should be able to arrest the bankers for holding OUR money for no reason.
    I have a sink hole home, it has been fixed, the bank has the documentation, but they continue to hold the insurance money I paid, NOT them, I paid, and they are making it hard for me to continue with the cosmetic repairs. They’ve given us 2/3 of the money so far, only $9000 left to give, we’ve had 4 inspections, they can see we are having work done, and they say they don’t care about cosmetics, but they give every excuse to hold onto the money. Each time it’s a different reason, over and over. We are current with out mortgage, the foundation has been fixed, and the INVESTORS have NO reason to play with MY Insurance money to fix my house. Ooe person is going to send it, another says on no, the next says Sink Hole homes are different, we’ll get you your money, the next person says they have investors to protect.
    I’m sure my insurance company says the money is for the repair of my home, not to give to investors so they can sit on the beach and sip drinks with little umbrellas sticking out of them. This is just legal theft!!!!!
    I’m sure some banker will come up with some bogus reason they can do this.

    • Mike I’m really sorry to hear that you are experiencing such pain restoring your home to its pre disaster condition. However when you gave you took your lenders money at closing and in return gave them a mortgage or other type of security interest in your property they became an additional insured and their rights are just as important as yours as the property owner.

      In most cases these days especially where lenders are owed more than the collateral (your home) is actually worth one might argue with good reason that the lender should take extra prudence to make sure the work is completed and paid for. This is in order to ensure that no additional liens could arise and further jeopardize their interest, regardless who paid the insurance premiums.

      • People please don’t listen to this Ricardo guy! The information he is explaining to you is all wrong. Basically your contractor has a banking relationship and can perform a bank to bank transaction that can avoid having Wells Fargo al together.

        • Jose – I’m entirely unclear how simply having a banking relationship with a bank, similar or not, allows a person to endorse a check that is not made payable to them without the third parties endorsement.

          It would seem to me, that cashing a check made out to another party without their knowledge and/or permission could be construed as fraud.

          Instead of simply disparaging me, perhaps instead you would care to educate and enlighten those of us who would like to know whatever you mean by your comments.

  59. No one has brought up the fact that mortgages have investors, ie Fannie Mae, Freddie Mac, etc. These investors are requiring specific documents and control the rules with regard to cashing insurance claim checks. I work at a bank and the biggest mistake customers make is they decide how a claim check should be processed, don’t provide the documents requested and spend all their energy calling and complaining. They need to use their energy to provide what is requested. I have spent hours telling a customer we need their contractor’s W-9. The time they have spent complaining they could have printed it off from the irs web site and faxed it in a hundred times! Customers can be their own worst enemies!

    • I don’t understand something. Why is the ban requiring you, the homeowner, to provide contractor W-9’s? That’s an unreasonable demand. You’re not a foreman or a business owner, nor are you a prime contractor. You’re the homeowner who has suffered the loss. I call shenanigans.

    • Why are you, the bank, requiring the homeowner to provide contractor W-9’s? That’s BS. They’ve got enough on their plate trying to rebuild what’s left of their home and you’re sending them on tax paperwork errands with the contractors? Shame. They SHOULD be complaining, as well as calling both the state regulatory agencies and possibly attorneys. DO YOUR JOB.

      • James – thanks for the great question. I assume you are wanting to know why your lender requires that your contractor complete the IRS W9 Form Also Known As the Request for Taxpayer Identification Number and Certification . It sounds extraordinary I’m sure to someone who doesn’t do business to business transactions, but it is actually very commonplace. Form W-9 by the Internal Revenue Service is simply a form that allows the payor to avoid having to withhold FICA as well as other state and federal withholdings from your contractor’s payments. After all, as you rightly pointed out, your comtractor is NOT employed by your bank theregore there is no reason for your bank to withold state and federal withholding, right?

        It is possible that you migh tbe confusing the IRS W-9 Request for Taxpayer Identification Number and Certification fomr which is the form which exempts the withholdings with the IRS Form W-4 which is required of all employees whose wages are subject to state and federla withholdings.

        Does that answer your questions?

  60. After calling Wells Fargo Home Mortgage daily since July 8 and sending all required documents overnight mail I have yet to receive a dime!

    The contractors have been putting the floors in and the counters come Wednesday July 27. There’s the electrician to pay and the plumber. The total cost of replacement is greater than the claim check.

    The latest stall tactic used by Wells Fargo Home Mortgage is they have pulled a prior wind damage claim from last year and are trying to disburse money on that claim. However they branch endorsed the final deprec check last year.

    Wells Fargo failed to order the final inspection of the roof even though I told them the work had been completed. Like most of us I was new to all this then and the contractor had me endorse the check (yes, it was made out to me and wells fargo but i could have had the ins comp stop pay and reissue to me and contractor) he deposited it in his account to pay for the labor and materials for my roof.

    Little did I know the intricate details of Wells Fargo Home Mortgage and and their monitoring game. First they gave me hell but when I explained what happened they agreed to endorse the final depreciation check and close the claim. Now, they are bringing that claim back up as an attempt to evade reimbursing me for monies spent out of pocket on materials for the water damage claim.

    The office of consumer affairs has called them and stated they got the run around before being told they would get a call back but of course they didn’t. Wells Fargo Home Mortgage claims they requested my 1/3 disbursement to the contractor on the 19th but that didn’t happen either. So they have ordered it again July 22.

    The insurance clause in mortgage contracts should be modified to include a time limit for reimbursement. Right now the clause is one sided in favor of the mortgage co. who BTW still want you making payments until they decide to begin rebuilding the damaged property.

    My family has vowed to help me stay in the house at all cost and get the repairs done if I promise to pursue Wells Fargo Home Mortgage legally for the insurance money and damages.