Can i be forced to use a license contractor on a home owners insurance claim or can i do it myself?

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We have owned the house for over 20 years. We have done all the work in our house with exception of the swimming pool, which we used a pool company. We had a slab leak which destroyed the kitchen cabinets and a bathroom. None of the replacement has to be permitted. We were in the process of moving the plumbing out of the ground and now we have done it sooner due to this slab leak. The contractors that bid the work would not do the work to our specifications as to secure cabinets to floor, support cabinets to each other, etc. So we wanted it done the right” way, so we did it ourselves. We just have been told by the mortgage company that it is a Fannie Mae law that we have to use a license contractor…can’t find it anywhere. Yet, we are being told that the property (work) has to be as good as it was before the claim or better. It is better then it was before. The work is done better then any contractor wanted to do. What can I do to recoop my money from my mortgage company?””

Asked February 9, 2017

1 Answer


While I am not an insurance expert, the answer to your question appears to be “yes” you can be forced to use a licensed contractor on a home owners insurance claim. The Federal National Mortgage Association, also known as Fannie Mae, has a series of requirements for how mortgage companies should handle property damage claims. Fannie Mae’s Servicing Guide Announcement SVC-2014-19 (procedures implemented as of February 1, 2015) includes requirements for use of licensed contractors (see https://www.fanniemae.com/content/announcement/svc1419.pdf). According to SVC-2014-19, once a mortgage company is notified of property damage it must consider the status of the mortgage loan and the losses involved...and make decisions regarding use of licensed contractors.

In the case of a current mortgage loan (or one that is less than 31 days delinquent) the mortgage company must act based on the amount of the loss. If the insurance loss proceeds are under $40,000 the mortgage company can use its discretion to determine if a licensed contractor is needed. In cases where insurance loss proceeds are over $40,000 the mortgage company must ensure that a licensed contractor is used for repairs to the property.

If a claim involves a mortgage loan that has been delinquent for 31 days or more,
the mortgage company has no discretion and must always ensure that a licensed contractor is used for any repairs.

In short, it appears that the mortgage company can require, and in some cases must require you to use a licensed contractor.

Answered March 20, 2017 by HomeGuy

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