Can I sue my bank for misuse of funds and causing me to lose my home?

I was unable to pay my mortgage for a few months, contacted my bank to try and work something out to bring it current. They were unwilling to work with me for several months. Once they finally agreed to work with me I had a house fire. They have made it impossible for me to rebuild my home, they are using insurance money for their own purposes, and are going to sell my home and then sue me for what they lose on the sale. The house is worth very little because they are holding the insurance money required to put it back together.

Asked on July 20, 2012 under Real Estate Law, South Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Unfortunately, while an argument can be made that the bank is acting unfairly, they appear to be acting legally:

1) If you get behind on your mortgage, the bank does not need to work with you--they are entitled to be paid as per the loan or promissory note, and do not need to work out a payment plan.

2) If under the terms of your mortgage and the insurance policy, in this situation they get first call on the insurance, they are not required to rebuild the home if economically not worthwhile. Instead, they can apply the insurance against the balance of what you owe and then sue you for any amounts not covered by the insurance or by the sale of the property/home.


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