Insurance Settlement Check Mortgage Company Endorsement

[kimolson]

What is the name of your state (only U.S. law)? Oregon

Can the mortgage company legally hold insurance settlement money if the property is scheduled for foreclosure?

We had a large water-damage loss while we were trying to mitigate terms of our loan, we are behind on payments and scheduled for foreclosure. This is a rental property and we were depending on rents to pay the mortgage. The mortgage company held the checks so we could not complete the repairs to rent the units. Obviously without renters we could not pay the mortgage or show any income for the period. Is there anything we could have done. I spent hours on the phone with the lender, transferring from department to department trying to just get them to oversee the work. I don't want the money, just the house repaired. They told me they can use the funds to cover past due payments. Is this true?

 

[moburkes]

You should have had loss of rent on this same insurance policy. But, yes, they are holding the check to insure the damage gets repaired, not used to pay your other bills.