This is a follow up to a blog titled;
But it should really be just called Part II because since writing that post it I have received thousands of views, dozens of calls, emails and comments and complaints which for some reason are directed at me.
What’s ironic is that I wrote the post to save the time from needlessly repeating to people I know who were asking me that same question over and over again.
The Golden Rule; He Who has the Gold Makes the Rules
The simple one word answer is “MORTGAGE”. Because of this your lender can and will dictate to you how and when they disburse the money. They can because you gave them permission when you borrowed their money and pledged your property as collateral!
To be specific if you have a modern mortgage originated in say the past decade, the security instrument known as the mortgage and is also referred to here in North Carolina as a Deed of Trust is a Uniform Instrument that likely uses the following language specific to insurance claims and property losses;
In the event of loss, Borrower shall give prompt notice to the
insurance carrier and Lender. Lender may make proof of loss if
not made promptly by Borrower. Unless Lender and Borrower
otherwise agree in writing, any insurance proceeds, whether or
not the underlying insurance was required by Lender, shall be applied
to restoration or repair of the Property, if the restoration or repair is
economically feasible and Lender’s security is not lessened.
During such repair and restoration period, Lender shall have the
right to hold such insurance proceeds until Lender has had an
opportunity to inspect such Property to ensure the work has been
completed to Lender’s satisfaction, provided that such inspection
shall be undertaken mortgage deed of trust document promptly.
Lender may disperse proceeds for the repairs and restoration
in a single payment or in a series of progress payments as
the work is completed.
Unless an agreement is made in writing or Applicable Law requires interest
to be paid on such insurance proceeds, Lender shall not be required to pay
Borrower any interest or earnings on such proceeds.
Fees for public adjusters, or other third parties, retained by
Borrower shall not be paid out of the insurance proceeds and
shall be the sole obligation of Borrower.
If the restoration or repair is not economically feasible or Lender’s security
would be lessened,the insurance proceeds shall be applied to the sums secured
by this Security Instrument, whether or not then due, with the excess,
if any, paid to Borrower. Such insurance proceeds shall be applied in the order
provided for in Section 2.
Now that you know WHY your lender can hold your check, let’s do something about it. Instead of complaining call your mortgage company right away. And the fastest way is NOT TO CALL the 800 number from your statement.
Your FIRST CALL should be to your Mortgage Loan Officer who wrote your loan. We call that “Service after the Sale”. But alas, given that 75% of all Mortgage Loan Officers have exited the business instead you should call the ESCROW Department. That is the department that once a year at the end of January sends you a a statement with either a check or a bill attached to it with either good or bad news. Most of the times you can find that Yearly Escrow Statement online of you subscribe to online billing from your lender and can find the detailed instructions and forms there too.
The Escrow Department will likely be the same department that will cash and hold your insurance claims check. Don’t be surprised if your bank/lender place a hold on the check for up to five business days due to the potential for fraud given the number of mass losses that have occurred recently.
Do everything they ask you to do and document to whom you spoke, the time and date and whatever you do DON’T MAIL THE CHECK! If possible hand deliver it. Find out if there is an Officer of the company in your city or nearby where you can take the check in person to be endorsed or processed. When that’s not possible, FEDEX is the next best option.
Once you have complied with all of their requests and feel that the requests being made of you are unreasonable then your next step should be to take to the Internet and post your story.
This is the fastest and most efficient way to get what you want. Tell your story in a succinct fashion omitting the anger and rhetoric that you will naturally want to spew. Here is a good place to start. Make sure and name your mortgage company by their full name not initials. Post pictures of the damages and if you have letters and documents that support your claim. Name the persons involved and the dates and times that you spoke to and faxed documents. Then have fun posting it in as many places as you can to see how long it takes your lender to contact you!
Your mortgage lenders marketing and public relations department has people trolling the internet looking for legitimate complaints like yours that they can resolve and show they care. When they come across reasonable people whose demands are reasonable, they will go out of their way to help. BTW – when they do resolve your problem, be a good interneter and post a follow up comment so others know how it was resolved.
If that fails your next step should be the State Commissioner of Banks and Insurance. Some states may be the same agency while others may not. And in some cases these types of complaints might even be handled through the state district attorney.
Finally, If there is a next time instead of DIY, hire a professional and reputable Restoration Company who can handle all of this for you. They are trained experts who deal with Insurance Companies and Mortgage Lenders every day.
- What is a Mortgage? (theraleighmortgageguy.com)
- How to cash your Homeowners Insurance claim check (theraleighmortgageguy.com)
- Restoration Company vs. Contractor/Repairman – 5 things to consider (theraleighmortgageguy.com)