I was talking to my friend Steven today. He was up in arms
because a potential client of his had their house foreclosed and it knocked him
out of a deal. Seems this person had an insurance claim and was paid by their
insurer. The mortgagee’s name was included on the insurance check, which by the
way is standard procedure. The homeowner then forwarded the check to their mortgage
company for endorsement: more standard procedure. The homeowner was behind on
their payments and when the mortgage company got the check, they cashed it,
used the proceeds to pay down the overdue payments and then promptly foreclosed:
unfortunately more standard procedure still.
Let this be a warning to everyone who is behind on their
mortgage and is unfortunate enough to have an insurance claim. The chances are
you will not get your mortgage company to release the insurance monies to you.
They will instead use the funds to pay down the what you owe them leaving you with an impaired property. You may very well find yourself in a double bind because
your insurance company can demand proof of repairs as a precondition to
renewing your property insurance. OMG!
You might be asking yourself: “what’s the point in paying
insurance if I can’t use the proceeds to repair my home?” Steven would be
asking that question right along with you and it’s a good question,
particularly in South Florida where premiums are sky high. What’s the
unfortunate homeowner to do? I’m not an attorney, so my first bit of advice is
to talk to one. Find out what your rights are.
Also, find out if you hire a contractor whether the bank is
required to release funds to the contractor in lieu of applying funds to the
balance of the mortgage.Or any other method of getting access to your money. And yes it is your money and your house...at least until the bank takes it over.
Let me know what you find out.
Bill
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