Here are the basic steps to follow to Handle a Claim Settlement Check with the Mortgage Company’s Name on it. If you have a settlement check from your insurance company with your mortgage company name on it. The immediate issue is that you will not be able to deposit or cash the check if there are others listed on the “pay to” line on the check. You will need those people to sign the check over to you first. So, here are the steps:
1. Call your mortgage company and ask for the “Loss Draft Department.” All mortgage company’s have a department specifically for dealing with insurance claim checks. Here is a directory of Mortgage Company Loss Draft Departments.
2. Please make sure you have your loan number available and the last 4 digits of your social security number.
3. Once you have the loss draft department on the phone, make sure you have their direct line and also jot down the name of the person you are speaking with. You may get disconnected and this direct number will save you a lot of time when you call back.
4. They will ask you how much the check is for. Tell them. Generally, if the check is under a certain amount, (usually $40,000), they will simply endorse the check and mail it back to you. Once the check amount crosses their threshold, they will probably want to supervise the work to your property. They want to make sure the work gets done on your house and you don’t use the money for something unrelated.
5. Get their overnight address. You don’t necessarily have to send the check to them overnight, but you can send the check to them via priority mail or FedEx, and they check this mailbox more often. ALWAYS SEND VIA CERTIFIED MAIL OR FEDEX WITH A TRACKING NUMBER. They DO tend to lose checks and then you will have to go through the process of getting the old check stopped, and a new check reissued by the insurance company. I have seen this take months.
6. Find out exactly what needs to be in the envelope before you mail the check to them. Sometimes they want the adjuster’s estimate or worksheet. You will have to obtain this from your insurance company or from your public adjuster. Sometimes they want a signed contract with a contractor. Sometimes they want a release of lien letter signed by a contractor.
7. Ask them if they want the check endorsed before mailing it and ask them if there is a reference number and if so, place it on the check and all paperwork that you mail to them.
8. Ask them how long the turn around time is. Remember, if the check is under a certain amount, they will endorse it and mail it right back to you. If the check is over the limit (each mortgage company has their own limit) then they will send you back only some of the money and will supervise the construction by sending an inspector to your property. Each time the inspector sees the work, he will approve a little more money. This way they control the repairs and make sure you do it.
HINT. If you have had a recent refinance or your mortgage company has changed names or was bought out, before you mail the check, you will need to make sure the settlement check was issued correctly by the insurance company. Banks change names all the time….especially mortgage company names.
*One more piece of advice. If you only have a small amount left on your mortgage, it would be to your advantage to pay it off. If you pay it off, then the insurance company is not obligated to put the mortgage company on the check and this will make your life easier. I realize paying off a mortgage balance is easier said than done, but you may be fortunate enough to have a low balance that’s doable. If you can, do it!
