Louisiana homeowners who received a flood insurance payments relating to the 2016 floods may find their mortgage company’s name on flood insurance check allocated towards structural damage payment.
Mortgage companies generally require their name be placed on flood or other property damage checks that relate to the structure to make sure the property is fixed or the mortgage paid off.
The mortgage companies usually have a “Loss Draft Department” to communicate with for purposes of disbursing the funds. Most have their own Loss Draft procedure. Some are listed online and others require you to call for information.
Fannie Mae, the leading source of financing for mortgage lenders, sets forth Servicer Responsibilities for Fannie Mae Servicers and the action to be taken depending on whether the property can be legally rebuilt. If the property cannot be rebuilt, the insurance loss proceeds are used to reduce the outstanding mortgage loan debt.
If the property can be rebuild, the Servicer will require details of the damage, including information about the proof of loss, contractor to be used, plans etc. and will monitor the disbursement of proceeds for purposes of making repairs, monitor the repairs and inspect the repairs from time to time. The Servicer may also require a lien release.