How Your Mortgage Company Releases Insurance Funds

We’ve covered the basic Roof Insurance Claims Process, but once in a while we get an insurance claim that involves the homeowner’s bank or mortgage company. This makes it a bit more complex. Homeowners often ask us how to get their mortgage company releases insurance funds. To better understand the steps involved, it helps to know why a mortgage company would want to have control in the insurance claims process.

WHY A Mortgage Company is Involved in Your Insurance Claim

When a mortgage company lends you money to buy a house, they’re essentially funding it and therefore “investing” in it. When a huge hail storm hits and damages the home, they see it as something that damages their investment.

By having their name on the insurance policy, they want to have a stake in the repairs. Their involvement ensures the funds are used correctly to make the repairs. It’s a way for them to keep the homeowner from making poor choices with the insurance money.

WHEN A Mortgage Company is Involved in an Insurance Claim

1. When their name is on the check and home insurance policy.

2. When the claim is over a certain amount, usually 10k-15k.

3. When the equity ratio in the home makes them a majority stakeholder.

4. When it’s their internal policy. Sometimes none of the conditions above matter and a mortgage provider will have stake in the claims process regardless. This is typical of smaller banks and mortgage companies.

WHAT A Mortgage Company Needs to Release Insurance Funds

You will need to take extra steps to meet the requirements of a mortgage company. As such, the roofing contractors and homeowners must collaborate during this process. This includes providing the mortgage company with the following:

1. Itemized Adjusters Report or Statement of Work (SOW)

2. Signed Contract between the homeowner and Roofing Contractor stating the work and dollar amount for repairs.

3. Roofing Contractor’s W-9, General Liability Insurance, and Roofing Contractor’s License- Every good roofing company should have these documents readily available and it should raise concerns if they don’t.

4. Conditional Lien Waiver- This is a document that most mortgage lenders want roofing companies to sign waiving their rights to put a lien on the home. Mortgage companies want to protect their investment against liens by unforeseen (and therefore unapproved) work.

As a result, these four factors affect how your mortgage company releases insurance funds. There are sometimes, though, things that delay the process of releasing funds (which means the extra steps also can delay roofing repairs):

• Supplementing Process
• Unforeseen Expenses caused by extraordinary circumstances such as decking repair.
• Mortgage Company requires an inspection verifying work
• Home requires a lot of trades. It’s important to find a roofing contracting that can do the main trades such as roofing, gutters, siding, windows, and painting.

Conclusion

In conclusion, the insurance claims process involving your mortgage company is a bit complex. It helps to know what to expect. Choosing a roofing contractor that is familiar with the process will minimize delays in both repair and releasing funds. If you think you might qualify for a new roof, give Mutual Roofing a call at (402) 889-3281 or fill out our contact form for a free inspection.