Does the mortgage company keep the insurance check from a flood if we are doing a short sale or a deed in lieu of foreclosure?

We were flooded out of our house. We are longer living in it. We will either do a short sale or a deed in liue of foreclosure. The insurance company has issued the check to both us and the mortgage company. Do we just split it then?

Asked on November 10, 2011 under Real Estate Law, Pennsylvania

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Good question. If you are not behind in your mortgage payments for the property that the insurance check was issued for, most likely you will be able to keep the check under the terms of your loan and the mortgage. However, if you are behind, then most likely your lender will require the check to be paid over to it.

I would ask the lender (mortgage company) what it wants to do regarding the insurance check and see what happens.


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