Can a mortgage company refuse insurance claim payment due to being in middle of loan modification?
Free Insurance Quote Comparison
Secured with SHA-256 Encryption
UPDATED: Jan 20, 2011
It’s all about you. We want to help you make the right legal decisions.
We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.
Insurance Question from Las Vegas, NV
Asked on 01/20/2011
Can a mortgage company refuse insurance claim payment due to being in middle of loan modification? Water pipe broke flooding bedroom & hallway, slow leak because mold was already forming. Instructed by insurance company to shut off water, adjuster to be there in 48 hrs. After many calls finally showed 3 weeks later! By then we had ever thing fixed exept new flooring. Insurance co. approved everything but check made out to us and mortgage company. Mortgage company will not forward any funds to us or apply to mortgage. So now we are further behind and have concrete floors. Can they do that?
Answer given on January 22, 2011
While this is not really an insurance question (maybe more a legal question) I may have some advice for you. Some insurance companies will make a check out directly to the contractor, rather than the mortgagee and the insured. You should call your insurance company and speak with the adjuster. Ask if they can stop payment on the first check and make it out to whomever did the repairs to the home. They should be agreeable to do this. Then you will owe the balance to the contractor (your deductible or whatever is not covered by the policy).
I don’t see why the mortgage company is unwilling work with you on the repairs, but they may be afraid that if they sign the check that you will not use the money to make the repairs. You may want to prove to them that the repairs have been made and if you have an invoice for the repairs, that may help you get them to send the funds.
IMPORTANT NOTICE: These answers are for general information purposes only and are provided by the person answering and FreeAdvice.com AS IS. It has not necessarily been reviewed by the management staff of FreeAdvice.com nor is it binding any insurance agent, broker, or other insurance professional or any attorney or insurance company. Insurance laws, regulations and practices vary from state to state and insurance policies and practices differ from company to company, by type of policy, by state and locality and by type of insurance. Tiny variations in the facts, policy language or a detail not set forth in a question often can change the outcome or a professional's conclusion. Although FreeAdvice.com has confirmed that the answer(s) was/were provided for the account of an experienced insurance professional, that professional may not be licensed in the state referred to in the question, and may not be experienced or up to date in the subject area. Unlike the answers provided here, upon which you should NOT rely, for personal advice you can rely upon we suggest you consult a licensed insurance professional in your area or retain a licensed attorney listed on AttorneyPages.com to represent you.