How do I get my insurance check endorsed by my mortgage company? An insider’s guide
A loss of your property, to say the least, is a complicated and time consuming process. Getting that insurance check (also called a loss draft) is often only half the battle. If you have a mortgage, your mortgage servicing company, as well as the entities that invest in your loan (such as Fannie Mae and Freddie Mac) have a say in how, when, and if they will agree to place their endorsement on your loan. check, or hold your check and disburse funds for you and your contractor to begin the necessary repair work.
What do you mean they can hold my check? Why is it my mortgage company’s business?
When you signed your mortgage paperwork, there was no doubt a clause that required homeowners insurance to be current at all times, in the amounts required by the lender. If you do not comply, the mortgage company will purchase and charge you for the insurance placed by the lender. You also agreed to report property losses to your insurance and mortgage company, and gave your lender the right to determine how, when, and even if your check is released so you can repair your property. Of course, they will insist that you repair their property instead of spending the money on other purposes. Your insurance policy includes a paid loss, or mortgagee clause, which states how insurance proceeds affecting the home and the lender’s interest in the property will be paid. Because your check will be made payable to all parties applying for the mortgage, as well as to the mortgage company, the mortgage company will need to sign the check. Depending on the amount of loss you have suffered, there are several scenarios that come into play.
My loan is current and the check is for only a few thousand dollars. Now what?
Generally, and depending on the mortgage company, if the investor limit (the amount that the investors in your loan determine you will endorse and release the check for) is less than 10-15000 and the loan is current, the mortgage company mortgage company will simply sign and release the check. If your mortgage company is a bank that has branches, they may be able to take you to the bank. All parties to the check will need to sign, and the owner will usually need to be present, armed with a copy of the adjuster’s report or worksheet. If there are no branches in your area, you’ll need to send the check and adjuster’s report to your mortgage company (often, actually, a company you subcontract your mortgage services to). If you want your check returned by express mail, you will most likely need to provide an express return envelope. Pay your contractors and you’ll be on your merry way.
I just got off the phone with my mortgage company and they told me mine is a “supervised claim.” What’s that? Why can’t I sign my check?
When a mortgage company monitors a claim, it is because the amount of the loss, as determined by the actual cash value on the adjuster’s worksheet, is above the limit by which the investor will sign the check without verifying that it is being made. doing the job. to the satisfaction of the lender. A mortgage company can also monitor the claim if the loan is delinquent. (It’s amazing how many people I’ve dealt with whose loans are deeply in default or foreclosure who are very upset that their check won’t clear right away.) In most cases, the lender will require the check to be signed and mailed to them, and they in turn will send the payment to third party contractors. A typical schedule might be 1/3 at the beginning of the claim as an initial payment to the contractor, 1/3 after a 50% inspection, and the final third after a 100% inspection is completed to the satisfaction of the mortgage company. If you have the ability to be your own general contractor, you may be allowed to self-contract, but you will have to be responsible for turning in paid receipts. You may need the following documents from your contractor(s), some of which will be provided by the mortgage company.
- Insurance Adjuster Worksheet or Summary
- IRS Form W-9 or a substitute provided by the lender. Your contractor completes this form with a tax ID or Social Security number. This is so the lender can set up an account for the contractor to send checks and tax forms to at the end of the year. A physical address, not a PO Box, must be on the document.
- Conditional Lien Release – Neither you nor the lender want a contractor to place a lien on your home after the work is complete, saying they are owed more money than stated in the original contact. The conditional lien release should normally match the amount of the contract the contractor has with you as the homeowner.
- Contract signed between you and the contractor. Again, the contract amount must match the conditional lien release.
- Certificate of completion. Some mortgage companies require a form signed by all homeowners stating that the work was completed to the satisfaction of the homeowners.
When do I get my first check?
If all forms are completed correctly, I’s are dotted and T’s crossed, once the lender verifies that the contractor is who they say they are, you can receive a check, payable to you, to any co-borrower, and the contractor within about two weeks. In my experience, it’s best to check with your lender’s draft loss department by phone every other day. Your contractor will only be able to receive information from the lender if you authorize it in writing, so keep that in mind if you want the contractor to monitor the claim and make inspection requests.
Does my contractor require more than a third payment? What should I do?
Depending on the mortgage company and the status of your loan, your lender may have a procedure in place for the servicer to review situations like this as an “exception.” The better your loan is, the better your chances of getting approved.
I did everything they asked me to do and I can’t get my checks.
Loss Draft departments are overworked, and it may just require persistence from start to finish of the process. Don’t assume that if you sent or faxed documents that they have, they were all correct and the money will be on its way. Do not leave anything to chance! ALWAYS follow up!
What if I have a first and a second mortgage?
Typically, the first mortgage holder will require all other parties to sign the check before presenting it to the first mortgagee. Occasionally, a second mortgage may require documents from the first mortgage stating that the first mortgage will monitor the claim.
There are a lot of variables and situations that I can’t cover here, but I hope that if the unfortunate happens, you’ll be at least one step ahead of the game and on your way to completing your repairs and getting back home a little quicker.