How It Works, Your Mortgage File

Homeowner’s Insurance Claims

Here are some photos of a recent storm that dumped over 40 inches of snow on our communities.

lead-south-dakota, lots of snow, deep snow

Storm

This fall storm caught mother nature off guard.

The trees hadn’t dropped their leaves and the wet, heavy snow wreaked havoc. Only a few hours into the storm and it sounded like hunting season.  Popping echoed everywhere as branches collapsed under the weight.  They landed on the sidewalk, roofs, cars, and across power lines.  Over 25,000 people lost power. Some for days.

Our neighbor’s roof buckled under the weight and a failing roof truss split the sheet rock .

Another noticed a sagging, brown spot on the ceiling.  A few days later contractors punched holes there and drained three gallons of water.

Flat commercial roofs collected thousands of pounds of weight.  This structure wasn’t up to the challenge.

TMone

Only months earlier, hail stones like these punched holes in roofs and shattered glass.  They dinged siding and destroyed gutters.

hailstones

Home damage sickens us.  We’re much happier shoveling snow than working with contractors and insurance companies.  Not to mention  tangling with our mortgage servicer over insurance money.

When you have a lien on your property the lender has a vested interest in making sure your home gets repaired.

Why?

Let’s say your roof caved in and three foot of snow now rests in your kitchen. To top it off, it melts and drips through your sub-floor creating a swimming pool in your basement.

You are uninsured, owe a significant amount on the home, and don’t have savings to cover the damage.

So, you default and walk away from the home leaving the lender with a soggy, worthless piece of collateral.  A lose, lose.

Now, let’s say you are insured.  Your insurance company will foot the bill.  Better news, you’ll be getting a new kitchen!

But, the check is made out to you and your lender which disgusts you.  They need to endorse it in which case they’ll hold the money.

Contact the servicing department right away.  Ask them what steps you need to follow.  They’ll want all kinds of information like a contractor estimate, lien releases for work complete, and inspections.

Be patient with them, especially if they are responsive and good natured.  Like you, they are protecting their collateral.

Do they have a right to hold your money? 

Most mortgages have a clause that allows the lender to control these proceeds.  You are better off learning what their expectations are upfront to avoid frustrations down the road.

In any event, button up and stay warm this winter.

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