My Mortgage company refuses to sign my Insurance repair check. What's worse...?

Question

Our mortgage company refuses to sign our Insurance repair check they say we have to sign and send it to them. They printed a new check, made it payable to me and the contractor for half the money, and when the repairs are complete and inspected they will send the other half of the money the same way. We have another check, and don't want to follow this same process. This holds up the repairs, it undermines our authority over our home with the contractor, it takes away our financial control over our home, and the right to change contractors if we want (since the contractor is making us wait because the money is his and he knows it). Is this process legal? Is it against state regulations? Is this considered unfair, and unethical practices? It sure feels and looks like it. We didn't buy our home 1 year ago for this treatment. Do we need an attorney? Do we complain to a government agency? Do we just send a certified, notarized letter saying we want them to sign any future Insurance checks, and threaten court action? We have not signed any agreement, nor have we ever seen this agreement at the closing of our home purchase. The Mortgage company admits we didn't sign anything as well. The check is less than $3500, but the principle is important to us. Please point me in the right direction.

Answer 1

i agree with all the above.  your "financial control"...YOU don't own the house, your MTG company does!  sorry, but THEY have financial control of your house until you pay them off.  This is standard practice in the world...sorry you need to just deal with it.

Answer 2

Then as your adjuster to make the check out directly to the contractor - or sign a "direction of pay" with the contractor, so that the insurance company pays him, AFTER all the work is completed to your satisfaction.

Yes, what they are doing is legal.  You agreed to it, as a matter of fact, at the time you signed the mortgage documents.  

An attorney can't help you, and will only cost you more.  

That insurance policy that you have, the mortgagee clause says the insurance company can't s***w over the mortgagee by not writing their name on the check, unless they're paying for the repairs directly.  

Of COURSE you signed an agreement - the MORTGAGE agreement.  Take it out.  Read it.  

If you want to bypass the mortgage company with the repairs, go talk to your agent, for options.  They will tell you how to do it.  

It's not, however, going to involve you being able to pocket ANY money on your own, though - the check will end up being made directly to the contractor, and you'll have to pony up the deductible.

Answer 3

The mortgage company is making sure the home is repaired. Think of it this way, you own the part of the house that is paid for--- they own the part of the house that is not. They have a financial interest in the house. They have a financial interest in making sure the repairs get done. There concern is that you will not get the repairs done - fall behind on the payments and they will foreclose on the house. Given the high fore-closer rate right now -- that's not an unrealistic concern. I am sure mortgage companies have been burned by this situation too many times and are starting to crack down.

As far as your policy goes, it has a loss payable clause that says the insurance company HAS to protect the mortgage companies interest. They have to put the mortgage company on the check.

So yes, what the mortgage company is doing is legal.

Answer 4

Yes, it is legal, and you signed a document at closing to permit this practice, whether you know it or not.

Insurance policies that were issued on the home you purchased have something called a "mortgagee clause".  That means ANY loss to structure of the property, must be made payable to the mortgage company and then to you...or directly to your contractor.

They don't care about your convenience...this assures them that the property gets repaired.

You can take control of the insurance policy all you want....as soon as you pay off the mortgage IN FULL.

But as long as you have a mortgage, the mortgagee clause is in force, and LEGALLY in force.  

Nothing you can do sweetie!

PS:  I think the real reason you are upset b/c it also eliminates your ability to make money on the deal.  Which is another reason why they don't allow you to get paid directly.

Answer 5

Everyone else here is right.   But you can always contact the insurance commissioner to make sure everything is being done correctly.