Your mortgage company requires you to keep homeowners property insurance in place as long as you own your home. When you sign a mortgage, you also agree to notify the lender of any property damage or losses that occur along with notifying your insurer. By signing your mortgage, you have also given the lender the right to have input on how, when and if repairs to your property can be done as well as if the check for repairs issued by the insurer can be released to do the repairs. Your obligation is to use the funds to repair the property and not on other things.
The insurer includes a mortgagee clause that states how insurance monies are to be paid. The check for the repairs will have your name on it and the mortgage company’s name on it. The check will need to be signed by not only you but the mortgage company as well.
How does all this work? If the amount is below $10-15,000 and you are current on your loan payments, then the mortgage company will usually just sign and release the check back to you. If your mortgage company is a bank then you can take it to a branch location. When you go into the bank, you will want to bring a copy of your insurance adjuster’s report or estimates. If your mortgage company is out of the area, and then you can send the check and report into the company so they can endorse the check and send it back to you.
The other scenario is that the amount needed for repairs is above the limit for which the mortgage company will sign off on without verifying that the work is being done to their satisfaction. They call this a “monitored” claim. If your loan is in default, the company may also monitor the claim. When the mortgage company monitors the claim, they will have you mail in the check with your signature on it, and then they will turn around and pay the contractor doing the repairs directly. They will usually release the money in thirds. 1/3 at the beginning, 1/3 after a 50% inspection and the final third after a 100% inspection is completed by the mortgage company.
There are some important documents that will probably need to be supplied by your contractor.
- The Insurance adjuster’s worksheet and summary
- IRS Form W-9 — This is used by the lender to create an account for the contractor to send checks to and any necessary tax forms. The contractor fills this out with a tax ID or SSN number.
- Conditional waiver of lien.
- Certificate of completion.
The lender’s Loss Draft Department handles the disbursement of funds. You might want to check in with them every few days with a telephone call. Keep on top of the process and don’t assume that this department has received your faxed documents or emails. Always follow up with them.
While many insurance claims are handled in a timely and efficient matter, sometimes insurance companies may choose to engage in tactics of delay, deny a claim entirely or employ other wrongful conduct such as intentionally and knowingly undervaluing your claim. If you have suffered a loss and your insurer refuses to fulfill its obligations under your insurance policy, you may have a right to file a lawsuit for your insurer’s bad faith tactics.
Our Oklahoma insurance bad faith attorneys represent clients throughout Oklahoma who have been unable to obtain compensation for their loss and cannot get reasonable answers from their insurer. Whether your insurer has denied your claim or simply refuses to deal with you fairly and promptly, we can help.
Contact us today for your free no obligation initial consultation! No Recovery No Fee! We will meet with you face to face and can handle cases anywhere in Oklahoma. We can even come to you!