Report: Mortgage Companies Can Hold Onto Insurance Claim Checks

In a recent article in the Chicago Tribune, a common situation homeowners encounter when dealing with mortgage companies is described.

Homeowners who have suffered property damage often find themselves going though various obstacles, when filing a claim with their homeowners insurance company.

Complications in this process include receiving the designated repair checks from the insurance companies, which is often payable to both the homeowner and mortgage company.

Even though the homeowner first receives and endorses the check, it is the mortgage company that endorses the check in order to cash it. However, homeowners often go through a difficult process with their mortgage company often refusing to relinquish the funds, which puts the home repair situation at a standstill.

Homeowners Insurance Claim Difficulties

Mortgage companies hold considerable power with the homeowner and insurance companies, in order to make sure the funds are used for the intended repair purpose. On the insurance claim checks, mortgage companies are named as loss payees on the insurance policy and is included on the check because it has a secured interest in the property.

This has caused concern and confusion in homeowners, like with the couple who wrote to the Tribune, who had their home partially destroyed by a fire. They were concerned about the fact that the mortgage company was named on the insurance claim check, and experienced significant trouble getting the check back after sending it to the company.

The advice given to the homeowner by the Tribune reporter was to review their mortgage, sometimes called deed of trust, and to talk to a senior officer at their home insurance companies to see why they are withholding the insurance claim check.

If the company is not compliant, the homeowner has the option of filing a complaint with the Federal Trade Commission, the Consumer Financial Protection Bureau, and the state’s attorney general’s office of consumer protection, the Tribune went onto say.

In the worst cases, the mortgage company would reduce their mortgage loans with the claim check, or not release the insurance check at all. Homeowners are encouraged to seek legal advice if their mortgage company is not acting within the homeowner’s best interest.

Other times consumers cannot wait for the insurance claim check to come, often needing to make vital repairs to the home before winter or some other deadline. In these cases, homeowners complete the work before the insurance claim check, they are often times on the phone with the insurance companies for hours and talk to multiple representatives.

This may subject homeowners to thousands of dollars in losses, and sets up an overtly difficult process to access their own money. Ideally the mortgage company will hold the insurance claim check, and then release the funds as the repair process begins.

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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