Flood insurance check...send to mortgage company?

[JodiR]

I am in Iowa and had flood damage around $45,000. My flood insurance company sent me a check for $38,000. I need to send this to the mortgage company and they will send me the money as I do the work. My question is... if after all the work is done and there is left over money, they can't legally keep it, can they? My damages are more than the amount of payment I received and I need to do some work myself in order to have left over funds to pay for what is not covered (carpet, finishing the walls, bathroom ,etc).

 

[breezy1077]

It's probably held in escrow to make sure the repairs are done? If so, once all the repairs are made they usually want what's called a completion certificate - then they'll release the remaining funds. I'd call the mtg. co..

 

[golfgal]

Who said you have to send it to the mortgage company and why? The check is probably made out to you and the mortgage company and they need to endorse the check. Usually you send it to them, they endorse it and send it back, you then cash it and pay your contractor. Why are they keeping it?

 

[breezy1077]

Who said you have to send it to the mortgage company and why? The check is probably made out to you and the mortgage company and they need to endorse the check. Usually you send it to them, they endorse it and send it back, you then cash it and pay your contractor. Why are they keeping it?

I thought that was strange too - that's why I assumed they wanted to ensure the work was done. I'd question it if I were you OP.

 

[Ms Marigny]

It's probably held in escrow to make sure the repairs are done? If so, once all the repairs are made they usually want what's called a completion certificate - then they'll release the remaining funds. I'd call the mtg. co..

Yes, after Katrina, most mortgage companies did it this way to ensure the work got done on the house. The terms do vary on the mortgage company though so you should call them to see how they want to handle it. For example, some companies did not hold the money depending on how much was owed on the house, etc.

Oh, I wanted to add that a friend of mine and her husband did all of the work themselves for the reasons you are describing and did get all of the monies released to them after the work was completed and all inspections were done, so it is possible.

 

[lowie]

after hurricane wilma we needed to send our check to the mortgage company as well. the day i sent it in, i also set up for our first appointment to have the work inspected. we had begun the work long before our insurance check came in. there was also quite a wait for an inspection. we lucked out and the inspector signed off on our money long before we finished all the repairs.. the mortgage company will not keep any extra money, if any is left over.

 

[Eeyore'sthebest]

Been through a flood twice. Let's be honest, the mortgage company owns your own home, not you. They need to ensure that the work is being completed. You endorse the check, send it to the mortgage company. They will probably release a set amount of money at that time for you to get started on the work. Once you get to a certain point (maybe 50%) with the work, you call them and they send out an appraiser. The appraiser will see what work is being done and if you've met their threshold to receive more money. They will then release more money. You go through the process again. Once all the work is done then you get a final appraisal and they will release the remaining funds. They will not keep any of the funds as long as the work is completed.

My only concern is that you mentioned that you have more damage then insurance paid for. Make sure you review the Proof Of Loss with a fine tooth comb. My one appraiser refused to go into the basement because she didn't want to get dirty. Then she didn't add in insultation, carpet underpadding, interior doors and I made them even pay for electrical outlets because they were flooded. Even if you've already signed the proof of loss you can go back and have it amended if you find things they missed. Do not settle for a lesser amount then what the damage is. They will also pay you for labor for clean up. Good luck with everything.

 

[JodiR]

Basements have limited coverage for flood insurance. I live in a split foyer so my lower level is technically a basement. There we had 2 bedrooms, a bathroom, laundry room, and living room. Coverage does not include carpet or any flooring, bathrooms, finished walls, doors (there is probably more).

I know I have to send in receipts to get my first 1/3 payout. Once the first inspection is done, do I need to send in receipts for a second payout or does the inspector give the ok to release more funds? I just want to make sure I get every penny back.

 

[golfgal]

Basements have limited coverage for flood insurance. I live in a split foyer so my lower level is technically a basement. There we had 2 bedrooms, a bathroom, laundry room, and living room. Coverage does not include carpet or any flooring, bathrooms, finished walls, doors (there is probably more).

I know I have to send in receipts to get my first 1/3 payout. Once the first inspection is done, do I need to send in receipts for a second payout or does the inspector give the ok to release more funds? I just want to make sure I get every penny back.

Is this Flood Insurance, from the National Flood Ins Program or is it a check from your private ins co? If it is from the flood ins program, anything ATTACHED to your house like carpet, etc. should be covered if you BOUGHT your own policy. If this is a payout from FEMA that is different. None of your STUFF in the basement, furniture, etc. is covered under the flood policy.

 

[JodiR]

I am required to carry flood insurance and all flood policies are through the National flood program (no matter who your agent is).

Here is what it says about basements:

National Flood Insurance covers structural elements, essential equipment and other basic items normally located in a basement, such as:

Unfinished drywall for walls and ceilings, including nonflammable insulation
Electrical junction and circuit breaker boxes, and required utility connections
Central air-conditioning units
Furnaces, hot-water heaters, fuel tanks and the fuel inside them, and heat pumps
Light fixtures
Foundation elements
Cleanup.

However, National Flood Insurance doesn't cover basement improvements such as finished walls, floors or ceilings, or personal belongings that may be kept in a basement, such as furniture and other contents.

 

[golfgal]

I am required to carry flood insurance and all flood policies are through the National flood program (no matter who your agent is).

Here is what it says about basements:

National Flood Insurance covers structural elements, essential equipment and other basic items normally located in a basement, such as:

Unfinished drywall for walls and ceilings, including nonflammable insulation
Electrical junction and circuit breaker boxes, and required utility connections
Central air-conditioning units
Furnaces, hot-water heaters, fuel tanks and the fuel inside them, and heat pumps
Light fixtures
Foundation elements
Cleanup.

However, National Flood Insurance doesn't cover basement improvements such as finished walls, floors or ceilings, or personal belongings that may be kept in a basement, such as furniture and other contents.

Well, that is interesting....that is not how it was explained to us. I guess their definition of 'attached' is somewhat different then we thought.

 

[Eeyore'sthebest]

Well, that is interesting....that is not how it was explained to us. I guess their definition of 'attached' is somewhat different then we thought.

JodiR is correct. And decks are not considered "attached" either. My front porch was covered because it was physically part of my foundation (both poured at the same time). My back deck is not covered because it is a wooden structure that was attached to the house with a few boards. They have changed the rules from the initial time that was bought our house.

JodiR - good luck with everything. And if you can do some of the work yourself it will save money. We did and it helped. Save all your receipts for income tax purposes. You will definitely get a decent refund next year. Get yourself a good accountant that knows how to itemize flood loss. And if you haven't already done it, write down everything you lost including every last personal item - toy, clothing, bedspread, shoes, etc. They can all be itemized on the income tax for next year. PM any questions if you have them. I've been through this twice now. Stay strong.

 

[Eeyore'sthebest]

I know I have to send in receipts to get my first 1/3 payout. Once the first inspection is done, do I need to send in receipts for a second payout or does the inspector give the ok to release more funds? I just want to make sure I get every penny back.

Forgot to answer your question. It will actually depend on your mortgage company. With my first flood, we needed to send in receipts and still needed the appraiser to come out. By the time the second flood came around, we had refinanced and they just sent the appraiser and never asked for receipts. It varies.

 

[golfgal]

JodiR is correct. And decks are not considered "attached" either. My front porch was covered because it was physically part of my foundation (both poured at the same time). My back deck is not covered because it is a wooden structure that was attached to the house with a few boards. They have changed the rules from the initial time that was bought our house.

JodiR - good luck with everything. And if you can do some of the work yourself it will save money. We did and it helped. Save all your receipts for income tax purposes. You will definitely get a decent refund next year. Get yourself a good accountant that knows how to itemize flood loss. And if you haven't already done it, write down everything you lost including every last personal item - toy, clothing, bedspread, shoes, etc. They can all be itemized on the income tax for next year. PM any questions if you have them. I've been through this twice now. Stay strong.

So how did they itemize your payout? It says 'unfinished drywall" . Did they not cover ANY drywall because it was painted or do they cover the drywall and just not the cost to get it painted?

 

[JodiR]

On my itemized list it says unfinished drywall. They will pay for the labor of removing the old and installing the new drywall but not the cost to finish it.