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Mortgage company holding insurance funds..need advice

1708 Views 4 Replies 4 Participants Last post by  Chris Johnson
A family members home had a partial burn (first 3 rooms of the house) she asked me to be general contractor on the job (my specific field is hvac/mechanical contracting) so I am subbing the work out to other contractors. This is my first time dealing with an insurance & mortgage company however..
I made a contract with the family member, insurance company sent check to mortgage company who released 20% of the funds. They instructed me to notify them when 50% of those funds had been used up. I did that today.
They however asked for an itemized price list of everything that still needs to be completed in the home and how much more money I believe it would take to complete the home...
Is that standard procedure?
Are they trying to re-negotiate the contract price?
Can anyone give advice about how to handle them and anything I should be aware of when dealing with them?

Thank you all so much..I greatly appreciate any advice.
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First, I would call the Insurance company and see if it is normal policy for them to send a check directly to the mortgage company. I have seen it before, but only when the policy stated it or if the homeowner requested it. Last insurance job I did, the check was written to the homeowner and he had to distribute funds.

Mortgage company should have no say in the contract price, that is between you and the homeowner (and to an extent the insurance company since they are the ones paying to "make it right"). Mortgage people are acting as the middle man, which is really weird to me.
Things have changed in the last decade. Alot of sneaky wording in mortgages and ins policies......both there to protect each others business not do what is right or fair to the consumer. BTW the mortgage co owns the home until the day the dead is registered so in that respect is why the ins co deals with them

10%+ of any job is used up the day I show up and unload any tools.

I could go into some horror stories about ins companies and mortgage companies but lessons learned and i know now make sure there is enuff $$$ to cover materials + a tad before even signing.
Man, insurance companies suck.

Start itemizing your job and send it to them for draws. Don't change your price unless you need too add costs for a change order.

Good luck.
This shouldn't be your problem, I realize it's family, but still that is your customer. It's there problem.

Perhaps they need to set up a credit line at the bank and when the bank feels like releasing funds they can do towards the credit line your customer is using to pay you out of.

The bank holds the mortgage, there will be something in the mortgage docs that the real property and dwellings must be intact and habitable. Your mortgage docs will not allow you to tear the house down as that is the collateral they are holding against your mortgage. This is why the customer must first notify the bank and follow their procedures for this stuff.

This is why it's not your problem, it can't be, the bank and insurance company have no responsibility to you.
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