Why is my mortgage company on my insurance check?
Your mortgage company is on the check because the house secures its loan, and the mortgage clause in your policy entitles it to be paid alongside you on a claim for the dwelling. Both of you have to endorse the check before the money can be used. Depending on the lender and the size of the claim, it may endorse the check and hand it back, or hold the money and release it in stages as the work is inspected.
The mortgage clause puts the lender's name on every dwelling check
A lender that holds a mortgage on your house requires you to insure it, and it has itself added to the policy as a mortgagee. That clause gives the lender a right to insurance proceeds for damage to the house, because until the loan is paid off the house is its collateral. A roof that goes unrepaired after a hailstorm lowers the value of the thing securing the loan.
So when the insurer pays a roof claim, the Texas Department of Insurance explains that the check for repairs is made out to both you and your mortgage company. This has nothing to do with your payment history. A homeowner who has never missed a payment gets the same two names on the check.
Payments for belongings or temporary living costs are usually made to the homeowner alone, since the lender has no stake in them. If your mortgage is paid off and an old lender still appears on the check, ask that lender for a release letter and send it to your insurer so the check can be reissued in your name.
What happens next depends on who holds your loan
If your mortgage is with a local bank, certain branches can endorse the check for you in person, and the process can take a single visit. Large national servicers work differently. Most have a loss draft department, and the check has to be mailed to it along with paperwork.
Servicers commonly ask for a copy of the adjuster's estimate, a signed contract with the roofer, the contractor's W-9 and a form of their own. Some endorse smaller checks and send them straight back. For larger claims, many deposit the money into a restricted account and release it in stages: a first draw to start the work, then the rest after an inspection shows the job is done. The threshold and the number of draws vary by servicer and by loan type.
The mortgage company will often send out an inspector to check on the progress or completion of the job before it releases the final draw. That inspection is the lender making sure the insurance money became a roof.
A lender holding the money adds its own steps to the timeline
The loss draft process runs on the lender's schedule. A missing signature, an unsigned lien waiver or a mailed check sitting in a queue can hold up a draw, and the roof job waits with it. The fastest start is to call the servicer's loss draft department the day the check arrives and ask for its checklist in writing.
On a replacement cost policy there are usually two insurance checks, and the second one, which releases the recoverable depreciation after the job is finished, often carries the lender's name too. Plan for a second endorsement at the end of the job as well as the first one at the start.
Keep copies of everything you send and note who you spoke to and when. Servicers handle thousands of these files, and a dated record is what gets a stalled file moving again.
How the check is handled varies with your circumstances. If Power House is doing your roof, your project manager will guide you through the steps your mortgage company requires.
The lender holds the insurance money, and the deductible is still yours to pay
The insurer subtracts your deductible before it writes the check, so the amount the lender holds is the claim minus that deductible. Texas law requires the homeowner to pay the deductible on work paid for with insurance money, and a contractor cannot waive or rebate it. Budget for it separately, since no draw from the lender will cover it.
More checks can follow the first one. If additional damage turns up once construction begins, the insurer can approve a change order and release more money for it, and a supplemental check for the dwelling usually carries the lender's name like the original. With Power House, any additional funds released through a change order are part of the job cost and are due just like any other insurance payment.
If you choose something the claim did not pay for, such as an upgraded shingle, that difference is between you and your roofer and sits outside the insurance money the lender is holding. Settle it in writing before the job starts so the draws and the invoice line up.
Related questions
Can I deposit the check without my mortgage company's endorsement?
No. A check made out to two payees needs both endorsements, and a bank will not deposit it with only yours.
Will my mortgage company send someone to look at the roof?
Often, yes. Mortgage companies frequently send an inspector to check on the progress or completion of the work, usually before releasing the last of the money they are holding.
Can I keep the insurance money and skip the repair?
Not while you have a mortgage, in most cases. Standard mortgage documents require insurance proceeds for damage to the house to go toward repairing it, which is why the lender is on the check and why it may inspect the work before releasing the money.
