General Question

Yetanotheruser's avatar

Why does my mortgage company want me to sign the check over to them?

Asked by Yetanotheruser (14505 points ) October 11th, 2011

I recently filed a claim with my homeowners insurance carrier for hail damage to my roof. It has been determined that the roof needs to be replaced, and the insurance carrier sent me a check for about half of the amount. This is a usual practice, and the balance will be paid upon completion of the job.

The check was made payable to myself and my wife (mortgage holders) and the mortgage company. When I contacted the morgtage company to get the check endorsed, I was instructed to endorse the check and submit it to the mortgage company, who will in turn re-disburse the funds. Is this a standard procedure, or is there something fishy going on here?

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6 Answers

YARNLADY's avatar

I never heard of that. Our insurance company just pays us direct for damages.

plethora's avatar

Makes sense. Since the mortgage company owns part of the house, they want to make sure the repairs to the roof get done.

JLeslie's avatar

When I had damage the check was made out to my husband and me I think. I don’t remember having to go through any special process to cash the check. Makes sense the mortgage company might be notified about the claim though.

creative1's avatar

Yes because if you are behind on your payments they will not sign off on the check until they are up to date. As regarding to half now, half later from the insurance company, they have to make sure you are having the work done for what was damaged making the property whole again.

geeky_mama's avatar

We bought our (third) house about 5 years ago. Sometime in the first 6 months we had a bad hailstorm and ended up making an insurance claim for a new roof.
We specifically chose a roofing company that dealt directly with our insurer (State Farm) and they received payment directly from State Farm.
At no point did a physical check get issued to us (the home owner) nor to our Mortgage company. Everything was done with electronic transfers of funds (they were preferred vendors on the State Farm system) and we were updated w/ statements by both the insurance company and the roofing company.

So – can’t say if your case is normal or not—but this is what ours was like.

Come to think of it.. this was the second time we’d made a roof claim (lots of bad storms in MN I guess..not to mention the tornado that leveled several homes in our neighborhood on our 2nd home together).

About a decade back, on the 1st home my husband and I shared, we needed roof/siding repair after a bad storm. That time our insurance worked with the home owner’s association—no payment to the mortgage company (or us) was ever made. In that case we did opt for some side repairs that we paid for (to the roofing company) with a check on our own..but again, no check to the mortgage company.

srmorgan's avatar

That is not the way it is usually done. @plethora had a good suggestion, making sure the work gets done, but you stated that the check was for only part of the work, so your adjuster will be out there to inspect the repairs once they are finished.

First thing I would do is ask you agent about this.

In my dealings with my insurer for hurricane damage twelve years ago, the check was made out to me for the total amount of the claim less my deductible. That is the usual procedure.

SRM

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