Insurance Check Made Out to Me and My Mortgage Company: How Do I Get the Money for Repairs?

If your insurance check is made out to you and your mortgage company, you'll usually need the lender to endorse it, and the lender may hold the repair money and release it in stages as the work gets done. That's because the lender has a stake in the house and is typically named on your policy. Call your loan servicer's insurance claims department (often called loss draft) as soon as the check arrives, ask exactly what they need, and plan your repair payments around their process.

Water damage claim with a mortgage on the house? Call 24/7 · (801) 948-2501.

Short answer: When an insurance check names you and your mortgage company, the lender usually has to endorse it because it's named on your policy. Many servicers hold repair money and release it in stages after inspections. Keystone Restoration's advice to Utah homeowners: call your servicer's loss draft department as soon as the check arrives, ask what documents they need, and plan contractor payments around their draw schedule.

This is general information from a Utah restoration company, not legal advice or advice about your loan. Your policy, your loan documents and your servicer's rules control. Ask your servicer and insurer for specifics.

Why is my mortgage company's name on the insurance check?

A homeowner asked us about a basement flood payout that went to the mortgage company and was being released in stages, and whether they could change the layout during the rebuild. It's a common situation.

Most mortgages require you to insure the house and name the lender on the policy. A widely used standard homeowners form has a mortgage clause that says, if a mortgagee is named, any loss payable for the dwelling or other structures will be paid to the mortgagee and you, "as interests appear." In plain terms, the lender's interest in the house is protected, so the repair money for the structure goes to both of you.

Your policy's wording may differ. Check the declarations page for the named mortgagee and read the mortgage clause in your policy.

What do I do when the check arrives?

The federal bank regulator's consumer site, HelpWithMyBank.gov, gives the simplest answer: when you get a check payable to you and the bank, notify the bank to find out what steps to take, including whether you should send them the check.

Then:

1. Call the servicer, not your local branch. Ask for the insurance claims or loss draft department.
2. Ask what they need: endorsed check, a copy of the adjuster's estimate, a signed contract with your contractor, contractor information, a lien waiver form, or other paperwork.
3. Ask how the money is released: all at once, or in draws.
4. Ask what triggers each draw: an inspection, photos, receipts or a signed request.
5. Ask how long each step usually takes with their process, and who your contact is.
6. Get the answers in writing, or follow up the call with an email summarizing what they told you.

We don't quote a typical timeline, because it varies by lender and loan.

Why does the lender release the money in stages?

Because the lender wants the house repaired before all the money is gone. How a servicer releases funds depends on who owns or insures the loan and on the servicer's own policies.

As one example, Fannie Mae's servicing guide for loans it owns (Guide section B-5-01, Insured Loss Events) says the servicer must:

• Immediately issue the borrower a check for any insurance money designated for contents or living expenses
• Hold undisbursed repair money in an interest-bearing account for the borrower's benefit
• For loans that are current, release an initial disbursement and then disburse the rest based on periodic inspections of the repair progress
• When multiple disbursements are needed, review and approve the final repair plans, including bids, and inspect the repairs as they're completed
• Follow stricter rules, including a final inspection, if the loan is 31 or more days delinquent

Your loan may follow different rules. Ask your servicer which ones apply to you.

Can I change the layout during the rebuild?

Ask before you change anything. Two parties care:

• Your insurer pays for the covered damage. Upgrades or a different layout are a conversation with your adjuster before work starts, and the difference may be yours to pay.
• Your servicer may need to approve the repair plan before releasing funds, and may inspect the work against that plan. A layout change that isn't in the plan can hold up a draw.

Get both answers in writing, then have your rebuild contractor write the scope to match.

How does this affect paying the mitigation company?

Mitigation (water removal, tear-out and drying) usually happens in the first days, long before rebuild. On many water claims, mitigation and repair are separate bills, and some insurers pay the mitigation company directly while others pay the homeowner. We explain how those two bills work in the mitigation bill wasn't in the adjuster's estimate.

Practical points:

• Ask your adjuster whether the mitigation invoice will be paid directly to the mitigation company or included in a check to you and your lender.
• If it's in a joint check, tell your servicer which part is for mitigation work that's already finished, and send the invoice and drying records with your request.
• Ask the mitigation company in writing, before you sign, how and when they expect to be paid if the money goes through the lender. Our post on signing a mitigation work authorization covers what to read first.
• Don't sign the whole check over to a contractor before the work is done. Here's what can go wrong when a contractor takes the check.

What paperwork speeds up a draw?

• [ ] Adjuster's estimate and any revised estimates
• [ ] Signed contract and scope from your contractor
• [ ] Contractor's license and insurance certificate, if the servicer asks
• [ ] Photos of completed work at each stage
• [ ] Invoices and receipts for anything you've paid
• [ ] Lien waivers, if the servicer requires them
• [ ] For mitigation: the invoice plus moisture readings and photos

On our jobs, hidden moisture is found with thermal cameras and commercial-grade moisture meters, and we take photos and video before the leak is fixed. Those records show what the mitigation work was for, which is what an adjuster or servicer wants to see.

What if the servicer is slow?

• Keep a log of every call, email and document sent.
• Ask for a supervisor if requests sit without an answer.
• Ask your adjuster whether they can help clarify the amount or purpose of the payment for the servicer.
• Don't stop protecting the house. Most policies expect you to prevent further damage. Drying and emergency work can't wait on a draw.

When should I call a pro?

Call a mitigation company as soon as there's water in the house, before the check question comes up. Keystone Restoration is an IICRC Certified Firm (#70266523). We handle water removal, tear-out and drying, and we give you the documentation your adjuster and servicer look for. Rebuild is handled by our sister company, Keystone BuildWorks, which is licensed and insured. If the water came in through the basement, see who to call for a flooded basement in Salt Lake County. If you're wondering whether one company for both stages helps, see why one company for mitigation and rebuild closes a claim faster.

Water in the basement and a claim to sort out? Call 24/7 · (801) 948-2501.

Questions about your specific situation? Talk to us — advice is free, 24/7.