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?

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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.

Asked on November 9, 2011 under Real Estate Law, Pennsylvania

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Whether or not the lender that has a mortgage securing its loan on your property is entitled to keep the check from your insurance check for flood damage to the structure depends upon whether or not the insurance carrier issues it to you, to the lender or to you and the lender jointly.

If the check is issued to you only, then the insurance carrier apparently has decided that you alone are entitled to the insurance proceeds for damages regardless of the anticipated short sale or deed in lieu of foreclosure. Good luck.


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