Why does the bank hold my extra money when it was my money that built the interior of the barn or shed?
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Asked February 28, 2018
It doesn't matter if you paid for construction on your property out of pocket before your insurer approved your homeowner's insurance claim. When you have a mortgage agreement with a bank, mortgage company or other lending firm, the financial institution typically requires that you also name it as a loss payee" or "co-payee" on the homeowner's insurance policy. In this scenario, lenders often receive or demand that they handle the check or direct deposit for an approved claim. The primary reason that a lender requires you to allow it to have this type of control is because lenders have been burned in the past by borrowers who acquire insurance claim payouts and then fail to complete repairs. After all, if a borrower fails to perform necessary property repairs, the lender loses part of its investment into property used as collateral in the mortgage agreement. A loss payee or co-payee status helps a lender protect its investment.
Lenders withhold extra funds from homeowners after the completion of repairs for several reasons: For example, your bank might be holding the funds until it can send an inspector to your property to confirm that the repairs have returned your barn or shed to its original state before whatever damage initiated the claims process. A bank can also refuse to reimburse insurance claim monies if you defaulted on your loan or failed to keep other financial product agreements. For example, the bank might have taken this course of actions because of an overdrawn checking or savings account.
If you've maintained your good standing with the bank and the repairs restored the property, then the bank is required to provide you with the remaining funds unless your mortgage agreement expressly states that the bank has the right to the money. The bank must also supply you with the funds even if you were about to default on a loan at the time that you made the insurance claim. Your best course of action is to talk with a bank representative about this situation. If the bank still refuses to release the funds, then you should speak with a mortgage lawyer about the possibility that your lender is in breach of contract.""
Answered March 1, 2018 by kai127