Can I use my roof check for this??!? (Howe: foreclose, insurance)

[peonypeony]

I had roof damage and my insurance co. sent out an adjuster. They alloted me a check for a total roof replacement (minus depreciation and deductible). Since I got the check, I've had a semi financial crisis. The insurance check is made out to me plus my mortgage company. Can I use this check for my crisis, rather than my roof? How? I will likely make up the money for the roof within three months, and will have the roof put on then. But I really need the funds now. Thanks.

[Austin97]

I have done this. You need to get the mortgage company to endorse it. Keep in mind that your roof essentially wont be covered until you fix. We waited about 2 years to fix ours after depositing our check.

[Komeht]

Originally Posted by peonypeony

I had roof damage and my insurance co. sent out an adjuster. They alloted me a check for a total roof replacement (minus depreciation and deductible). Since I got the check, I've had a semi financial crisis. The insurance check is made out to me plus my mortgage company. Can I use this check for my crisis, rather than my roof? How? I will likely make up the money for the roof within three months, and will have the roof put on then. But I really need the funds now. Thanks.

Almost certainly no. The bank requires insurance to protect its collateral which is why the checks are made out to mortgagor and mortgagee. If you are over collateralized then it's possible (highly unlikely but possible) the bank would agree to release the funds for other than the house. However, if you don't have a LOT of equity in the house they won't consider this for a second.

[peonypeony]

How would the bank "know" how I use the funds?

[Komeht]

Originally Posted by peonypeony

How would the bank "know" how I use the funds?

For one, even if you managed to cash a check written to mortgagor and mortgagee without their signature it would be committing fraud to cash the check and use it for your own purposes. Without reading your mortgage directly i cant say but it would almost certainly be a breech of covenant that that causes and instant event of default in which the bank can foreclose on the loan immediately (which, is what banks do when they have borrowers trying to pull fast ones one them).

Your best bet is to explain your situation to them. They'll either allow this if they feel otherwise secure, or they won't in which case you might ask for a refinance to pull out equity or stretch out the terms of the note so you have enough resources to cover all your obligations as they come due.

[Austin97]

You send the check to your mortgage company. YMMV on what they do, some will hold it until you have proof of an expense. We just had to have the estimates in place.

Some roofing companies will even give you a high estimate that you can take back to your company so that the insurance company pays more and then cut you the extra. (insurance fraud). We did not do this, but we did wait a long time to repair our roof.

The downside of waiting to repair is that if the roof cost more, the insurance company didnt have to pay the extra. If we had done it right away and it had cost more, the insurance company would have paid the additional amount.

[pmiranda]

As with car repair, you should do the repair ASAP to prevent further damage and also so that if the repair costs more than the insurance adjuster expected, they can issue a supplement. If you wait and pocket the money, it's on you if it costs more later.

Of course, as long as you have a mortgage, the bank has a right to require you to do the repair.

[gpurcell]

Fix your roof.