Our California home was a total loss due to fire, and we plan to rebuild. The mortgage company released our overage to us, and they are holding insurance payout funds equaling the amount we still owe on our mortgage.
We just received a letter from our mortgage company stating that there have been no updates from us in the past 45 days on the status of repairs to the property, and reminding us that “as part of the terms of your claim, you are required to complete all repairs listed on the Adjuster’s Worksheet and request an inspection of those repairs. Failure to comply with completing an inspection may cause you to become ineligible for this expedited claims process in the future.”
The issue is, we had to first wait for the Army Corps of Engineers to complete debris removal, then have the property surveyed. We are now meeting with an architect, and we are in the middle of choosing a design. This means we are still a few steps away from getting a detailed quote from our general contractor, and a long way from being ready for an inspection of 50% completion.
What do we need to communicate to the mortgage company at this point? Near the end of the letter, they also state, “In the event of extreme damage to the property or a total loss, please be aware that [Mortgage Company] has the right to apply the insurance proceeds to the account if repair of the property is not economically feasible.” We do NOT wish this to happen – we need the remaining funds for the rebuild. A new loan would be at a higher interest rate than our mortgage, so we want that mortgage loan to stay as is. The rebuild is economically feasible in our case, but we need time (certainly more than 45 days!) to complete the entire rebuild of a home. What should we do for now?