Why Do Mortgage Lenders Get to Keep Insurance Checks?

Homeowners who suffer property damage from fire, theft, hail, wind and other events can tap into their insurance policy in order to restore their asset.

However, many homeowners have reported that it is not always easy to get a mortgage lender to release the funds necessary for repairs.

Some homeowners claim they spent countless hours on the phone trying to collect the money to begin restoration, while others report that their lender flat-out refused to release insurance funds. 

This has left many borrowers raising questions about why mortgage companies are allowed to hold onto insurance checks and what they need to do to get their money.

Home Insurance Policies Overview

In the majority of mortgage agreements, the lender and borrower agree to specific terms when it comes to covering damages. The borrower is required to contact the insurance carrier promptly if any damage has occurred.

In the event that repairs are deemed necessary, the mortgage lender is allowed to hold on to insurance checks until they have inspected the damaged property to make certain that restoration has been completed to their satisfaction.

However, the mortgage company is also allowed to give portions of the payment to the homeowner as repairs are made. Meanwhile, any interest that the lender receives through holding onto the insurance claim funds is theirs to keep.

Essentially lenders are allowed to hold onto or disperse the funds however they see fit. When homeowners agreed to the terms of borrowing money for a house payment, they also agreed that the lender would be coinsured; this means a homeowner cannot accept an insurance check without making repairs.

How Do Homeowners Get the Insurance Funds?

Homeowners may be tempted to call the 800 number off of their mortgage statement as a first step in getting the insurance funds they need, but realtor experts warn against this.

Instead, homeowners should attempt reaching the mortgage loan officer they worked with initially. Due to the large turn-around of loan officers, if the person originally worked with to get the mortgage approved has left the business, homeowners should try calling the escrow department. The Escrow Department is most likely the place that will hold onto the insurance funds.

From there, homeowners should consider documenting who they spoke with, as well as the date and time. Homeowners should do everything they are instructed to do and if still denied or delayed funding consider legal action.

Insurance Claim Settlement Class Action Lawsuit Investigation

Numerous homeowners have complained that the process to receive insurance funds after they suffered property damage is not only inconvenient but also a burden they don’t need on top of dealing with contractors etc.

Many claim that they have had to use their own money and hope that the mortgage company eventually reimburses them. This has ended poorly for some homeowners who are out thousands of dollars only to have their claim rejected.

An insurance claim class action lawsuit investigation has been launched to help homeowners navigate the legal process of getting the money they deserve. Contact an insurance claim settlement lawyer to find out if your legal rights.

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.

Get a Free Case Evaluation Now