Mortgage Companies Scrutinized for Withholding Insurance Checks

Attorneys handling lawsuits for homeowner insurance claims are currently looking for potential plaintiffs to bring homeowner insurance lawsuits against various mortgage companies.

Lawsuits against various mortgage companies will likely allege that the defendants wrongfully withheld homeowner funds, created unnecessary hurdles to prevent homeowners from collecting their money, and failed to disclose to homeowners that the company was retaining funds.

This class action lawsuit investigation began as stories surfaced of numerous homeowners having trouble recovering insurance payments paid out to their mortgage company preventing them from making necessary repairs to their homes.

Generally, new homeowners are required by their mortgage company to purchase and maintain homeowners insurance on the property as a requirement of the home loan. Along with this requirement, many mortgage companies require homebuyers to include the mortgage company on the insurance policy as a named beneficiary. This is done to ensure that when an insurance payout is made out to a homeowner the money must be used towards fixing the home and restoring the value of the property.

Because the mortgage company is a named beneficiary on the payout, the insurance company will include both the homeowner’s name and the mortgage company’s name on the payment. This means the homeowner must endorse the check and then send they payment to their mortgage company for its endorsement.

Normally the check is then placed in an escrow account and the money is released as the repair work is completed. If both the structure and the contents of a home are damaged, an insurance company will likely write two separate checks: one to cover the damage to the personal property and another to cover the structural damage to the home.

In some cases, contractors may request payment up front prior to beginning any repairs, but this can cause difficulties for some homeowners. In this case, homeowners should show their mortgage lender the contractor’s bid highlighting how much the contractor is requiring up front.

Even then, the mortgage company may want to inspect the finished repairs before releasing any of the funds. Mortgage companies and banks should immediately release any funds not related to damage incurred to the dwelling along with any funds in excess of the remaining balance of the homeowner’s mortgage.

Many state regulators have published guidelines for mortgage companies and banks to follow after a major disaster has hit the area. These guidelines can be useful for setting expectations of insurance claim payment.

Law firms are investigating several major mortgage companies and banks for potentially violating homeowners rights. Some of the mortgage companies and banks that are being investigated include Bank of America, Wells Fargo Bank, Capital One, Nationstar Mortgage, Regions Bank, Seterus Inc, and several others.

Deciding whether or not to bring a mortgage company lawsuit is a decision that should be made on a case by case basis with the advice of a legal professional. In some cases, a homeowner insurance attorney may be able to help homeowners recover all or part of an insurance claim settlement from their mortgage company.   Lawsuits like these help hold mortgage companies and banks accountable for their actions.

Join a Free Insurance Property Claim Class Action Lawsuit Investigation

If you have experienced difficulty recovering insurance property claim money from your mortgage company, you may have a legal claim. Submit your information now for a free case evaluation. If you qualify, a lawyer will contact you to discuss the details of your case.

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