Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jan 20, 2011

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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.


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