If you have a mortgage, the lender is almost always listed on your home insurance as an additional insured. So if your home is significantly damaged ($5,000 or more) and your insurer sends a check for the repairs, that check will usually be made out to both you and the lender. Before you can access the funds, you need the lender’s sign-off.
Under normal circumstances, lenders want borrowers to repair and maintain their homes, and they will sign off on insurance checks so that can happen. But in today’s economy, lenders are increasingly forcing disaster victims to use their insurance benefits to pay down their loan instead of repairing or rebuilding. This has been a serious problem for wildfire survivors we’re helping in Bastrop, Texas.
To help consumers successfully negotiate lender releases, UP recently published Texas Tips on Your Insurance Money and Your Mortgage to supplement our popular Getting Your Mortgage Company to Release Insurance Proceeds. The Texas tips were written by volunteer attorneys Ken Klein (’03 Cedar Fire survivor) and Chris Files (Bastrop County Long Team Recovery Team) and published with support from the Austin Community Foundation. This topic is now part of our standard Roadmap to Recovery curriculum and will be on the agenda for our Colorado wildfire recovery program.