Ashley Milano  |  December 29, 2015

Category: Consumer News

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homepwners insurance lawsuitHomeowners insurance protects the homeowner against a variety of risks that come with home ownership.

The benefits are designed to cover the home’s structure, personal property, cost of living arrangements in case of home damage, and certain other liabilities that may occur in the wake of damage or total destruction.

However, in the event of serious damage or destruction, homeowners might be surprised to find they don’t have total control of their insurance claim checks.

Because mortgage holders have a financial interest in a home and are named on the insurance policy, the companies take steps to protect that interest. That includes holding onto a chunk of repair money until homeowners provide proof that the damage is fixed.

If you have a mortgage, and your home has suffered severe damage or been destroyed, some or all of the payment checks from your insurance company will be made payable jointly to BOTH you and your mortgage company.

This happens because your lender has a financial interest in the property that your insurer will honor and protect.

Until your mortgage company releases its claim on some or all of the settlement funds, they will sit in your mortgage company’s account. This means that before you can begin to rebuild, you must first understand the process of how to get your mortgage lender to let go of your insurance settlement proceeds.

Homeowners who are having difficulty gaining access to insurance claim funds may want to follow these tips in order to get control of the insurance funds.

  • Get in touch with your mortgage lender or escrow department rather than dealing with the insurance company, and stay in touch. Be persistent and patient, polite but firm.
  • Document everything. Keep a log or diary of the name and contact information of every person you talk to, the time and date, and what was discussed during the communication.  Write detailed notes that review what’s happened to date.
  • Hold off mailing the check. Instead, it is recommended to hand deliver the insurance claim check to a company officer to be endorsed or processed.

What if the Lender Holds the Insurance Claim Funds?

While most lenders have the right to hold on to insurance claim checks during the repairs or restoration process, some lenders may opt to release funds in a series of payments or all at once. Even if a lender holds the insurance claim funds or releases them intermittently, this can cause hardship to the homeowner.

Until the mortgage lenders endorse the settlement check and release the money, homeowners cannot use the settlement money to pay repair bills. Many contractors will not begin repairs without receiving some sort of deposit or payment, leaving the homeowner to pay for repairs out of pocket.

A homeowners insurance claim class action lawsuit investigation is underway, targeting many major mortgage holders and financial instructions that may be holding up the property damage claim settlement process and in turn causing undue stress and hardships for their customers.

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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9 thoughts onTips For Getting Your Mortgage Lender to Release Insurance Claim Funds

  1. Monique Hibbs says:

    My mortgage company has given me the run around for a year now with hurricane Ida. I’ve complied with all their run around. I have 2 contractors, windows $10k 50%=$5k & HVAC $19k 50%=$10k both want 50% down to start the job. I even requested to pay the two contractors directly and complied with everything the mortgage company requested to do so. The mortgage company sent me check payable to me for $3800. Today they called me and told me I have to come out of pocket because they are not releasing anymore money until an inspection can ge completed. To which I replied your welcome to inspect any time but no work will start until the 2 contractors receive their 50% down payment. I also mentioned the insurance company is holding is the other half of the 50% based on completion and inspection and my mortgage has held me hostage for over a year now and I’ve now had to file for an extension on depreciation. They said I must come out of pocket. I am on disability and cannot afford to come out of pocket. This is so unfair to leave me held hostage in the louisiana over 100 degree heat without air conditioning for over a year and the compromised windows. I’m going to lose the balance of the depreciation because the contractors won’t start without 50% down so they can buy the materials for their jobs. This is insane to do this to people.

    1. Monique Hibbs says:

      I have FINALLY got my HVAC guy paid in full. Well at least I’m waiting on his last check which the mortgage company says in being overbites to me. However the mortgage company Wells Fargo has now refuses to release anymore funds. I said the window people are the only other vendor VI only had the the two and the window people refuse to start without 50% down payment which is $4400. My insurance company will not send the other 50% until their adjuster comes out and verified the window work is complete. Wells Fargo sent their adjuster out here twice and gave verified 90% complete as it’s just the windows left. The guy Joe I spoke to today at the mortgage company stated he cannot even resubmit my request because of the way the mortgage wrote they will not be releasing anymore funds ! I even asked to make the check payable to Window World and send the check to them. This run around with this mortgage company has been going on over 1 year as hurricane Ida struck on 08/29/2021. It’s now 12/20/2022. This is insane !!! I’ve endured so much stress and pressure on trying to run them down and send all their required paperwork that seems to change if you call back 3 times and get 3 different people in one day. They are trying to make interest on our money. I have legitimate licensed vendors to do my work and my insurance company has been a pleasure to deal with UTS my mortgage company causing all the havoc and caos stress and run around.

    2. Kathy says:

      This is happening to me right now as well. The insurance company is holding back $72,000 till the repairs are finished. The mortgage company is holding back the $63,000 check that needs to go to the contractor. I had 3 contractors 1 1/2 years ago. They were given an amount just enough to do the beginning clean up. They wanted to contractors to do more work out of their pocket then they would get paid. I have the most crooked mortgage company, Mr Cooper. I lost all 3 contractors due to lack if payment. I live 50 miles from any big town, contractors are hard to come by. I have just found a contractor almost a year later. He needs $60,000 to order & pay for a prefab shop. The mortgage company refuses to release any money & want the contractor to pay for it then get reimbursed. There’s not a contractor out there thar would do that. It took the insurance company 17 months to pay me back for paying for windows out of my pocket. Just found out if the shop is not totally repaired by Dec 20th (apx 6 weeks from now) then the mortgage company gets to keep 100% of all the of insurance funds. Just found out on Facebook that they have done this to hundreds of people in different states as well. Lawsuits, class action suits, etc.. They have 1 star with the BBB. They are crooked & do this plus many other illegal things which they have also done to my bank account, etc. I live on Social Security & can’t afford an attorney. No one wants to help or put a stop to this mortgage company. Read about them on Facebook.

  2. Joe issel says:

    My home was a total loss. Dealing with the bank goes like this. They want a document . I make one. Not good enough it needs this . So I do this . Then it needs this . So I ask is that everything ? Yes . So I send it in . I don’t here back so I call. What document ? The one I sent on x date ! I don’t see any document sir . Ok check my emails like I I said on x date. Ok I see you did send an email . Ok can you open it ? Ok . Hello do you see it has everything you just asked me for or told me it still needed . I can’t answer that sir . What ? It’s not in my job discriptiin. Are you kidding me? Then can you at least tell me if it’ has a purple border ? Yes sir. Ok so we are looking at the same thing . Can you look at it and see with your own eyes that this floor plan has every room labeled and the total sq footage . No sir that’s not in my job discription . So you can set there and tell me to fix a document I already have that’s right in front of you and you cannot tell me if what you asked for is on the computer screen directly in front of you. No sir . The next person wanted the sq footage of every room . ??? The next said I had everything . The next said I didn’t then said I did . But wouldn’t submit them for me . Her computer started acting up ? Now I have no home no money . I’m 99 percent done . And broke . I’ve spent 160 k of my own money and got nothing from them . I asked that the money go to principal . No not without paying the difference first . Now I’m in foreclosure due to lack of funds.

  3. Michael D Yasmer says:

    I have a situation with a double withholding of funds to repair my father’s home. A broken pipe resulted in damage to my late father’s home as we were preparing to list it for sale. I am the executor. The insurance company estimated the cost of repairs at approximately 12,000.00. They sent a check for half that amount (approximately 6,000.00). The mortgage company kept half of that check and issued funds to us (the contractor and myself) in the amount of 3,000.00. We are expected to COMPLETE the entire repair of the home with one forth of the funds. That’s right. They expect the entire project to be completed with only a quarter of the funds!
    In the meantime I am having to pay all the bills on the property, including the overpriced Homeowner’s Insurance Policy. And I have the Probate Judge threatening to remove me as executor as the estate should have been closed many months ago.
    I do not know what to do because my requests fall on deaf ears from both the mortgage and the insurance companies. I am at my absolute wits end!

  4. Jocko says:

    I have an issue where my mortgage servicer steered me into financial hardship by no t releasing funds from 2016 flood claim of which I had come out of pocket to pay because hurricane Harvey flood waters destroyed the property a second time before their inspector could inspect it to 90-99% complete.

    Additional financial hardship was then caused by the mortgage servicer after I came out of pocket again after hurricane Harvey for cleanup, debris removal, mold treatment, drying, demo and preventive work to avoid larger damages or costs in the future. After a long wait for disability back pay and footing the bill personally without reimbursement from the mortgage servicer special escrow account I couldn’t pay my mortgage note where even after receiving a reinstatement payment foreclosed on me and still holds those funds i assume believing they are theirs. From my understanding the transfer of ownership of the property voids my claim to any additional liability of which a supplemental and Proof if loss was being prepared. They misled me by telling me the reinstatement money transfer had been received and my account was current until after the foreclosure sale preventing me from action to bid on my on home: I now notice they have my home for sale on an online auction site but have yet to revive any documentation showing they purchased my property in absence of any other bidders (me).
    I don’t know what to do. How long do I have before the sheriff comes to throw my family out of my home. My wife and I are both disabled, I’m unable to move the possessions that didn’t get destroyed by the floods out of here due to my physical limitations and my wife’s mental condition is doubtful to withstand the stress of being physically removed from our property which contained her and my life’s savings. I would defend our home against thug home invaders, robbers, thieves, and hardened criminals how do I defend against a criminal entity such as my mortgage servicer?

    Please help TIME SENSITIVE

  5. John Macdonell says:

    Hello, Briefly, a rental property of mine was damaged by fire. The property has a $108k loan against it. It is worth $300k repaired. Insurance payout was $250k. The expected bill to repair the building is about $250k Bank wants to pay out the $108k loan before releasing the remainder of the funds. But this will leave insufficient funds to repair the building. Can the bank take insurance funds – intended for repair, and use them to pay out the loan instead? My credit rating is excellent. Thanks, John

    1. Dawn Jones says:

      i have a very similar situation. did you ever find an answer?

    2. Rollins says:

      Similar situation here..great credit score being demolished due to paying out of pocket causing us to pay interest while the bank hold the $.

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