Mortgage Check Process
How Do I get my Mortgage Company to endorse my check after my Homeowner’s Claim?
Getting your Insurance check endorsed by your Mortgage Company can be a longer process than you would like. If you have a Mortgage, your Mortgage Company as well as the entities that back your loan(ex Freddie Mae and Freddie Mac) have a say in how and when they will either endorse your check or hold the funds and release them to you or your contractor to begin repair work.
Why can the Mortgage Company hold my check and determine how and when it is released?
When you took out your mortgage you agreed to report property losses to your insurance and mortgage companies. You also gave your lender the right to determine how and when your check is released so you can repair your property. The Mortgage holder owns the property with you and will want to make sure the money is used to make the proper repairs rather than for other things. As you can imagine, in today’s economy, there has been quite a bit of fraud or non-repair of insured losses. The amount of loss to your property will determine the mortgage company’s steps in processing your claim checks.
My Loan is current and the check is less than 10 or 15k?
The typical process if your loan is current and the check is below the particular mortgage Companies limit, they will endorse the check without too much of a hassle. The limit for this easier process is usually 10K or 15K. If your Mortgage Company is a bank that has branch locations you can many times go to the local branch for the endorsement. They will most likely want to see a copy of the adjustor’s report and the roofing/repair contract before they will endorse the check. If your Mortgage Company does not have any local branches you will need to mail the check and the adjustors report to your Mortgage Company and they will mail it back to you. Ask your Mortgage Company what the typical turnaround time is for the endorsement so you can have a good idea of when you can schedule your repair work.
My check is over the limit in which my lender/investor is not willing to just endorse the check?
Typically in this instance your lender will want to monitor the work being done on your property. A lender may also monitor the claim if you are not current on your mortgage payments. In these cases they will typically want to pay only 1/3 at the start of the claim for a down payment to the contractor, 1/3 at the half-way point, and the remainder upon completion. They will likely need to inspect the property before the final check is released. You may need several documents from your contractor, some of which will be provided by your Mortgage Company.
- Signed contract between you and your contractor.
- Insurance Adjustor’s loss report
- Certificate of Completion signed by Homeowner stating work has been completed
- IRS Form W-9 or a similar form provided by lender. This form is for your contractor so the lender can establish an account to send checks to your contractor and tax forms at the end of the year. A physical address must be on the document.
How soon will I get my first check?
If all the paperwork has been completed correctly and the lender verifies the contractor is legitimate, you should receive your 1st check within 10 business days. The check will usually be made out to you, any co-borrower, and your contractor. It is always a good idea to call your Mortgage Company Insurance claims department to verify they received your paperwork and that it is in good order.
What do I do if 1/3 down is not enough to get my contractor started?
Depending on your Mortgage Company and if your loan is current, the lender may have a process to grant an exception for your situation. Typically, your roofing/home repair project can be completed in a matter of days. The cost of materials alone can be greater than or equal to 1/3 check the mortgage company initially releases. You may try and have a 3 way conversation between you, your contractor and the mortgage company to request a more reasonable payment schedule knowing the project should be completed in a matter of days.
There are many different scenarios in getting the insurance checks endorsed and/or released so the proper repairs can be completed on your Home. We hope this is useful information in getting through this process as quickly and painlessly as possible.