The two ways it is done:
1. Pay off the loan so the lien is released.
2. Have the check issued to both you and the bank. The bank after begin assured that the repairs are being done (you'll have to call them to figure out just what they want) will endorse the check so you can have it cashed.
The last time I ran into this, the amount remaining on the loan was about what the check was so I just endorsed it over to them and told them to use it to pay off the balance.