Fire Insurance paid mortgage company

[Sissy Treat]

I have a friend who owns a few houses he rents out. 2 Weeks ago the renters young 17 year old girl left the iron on the bed..the iron caught the bedroom on fire. Firemen put the fire out and gave a value on the loss.
The fire insurance came out and assesed the damage and sent my friend a check for $23,000 BUT it also has the mortgage companys name on the check along side my friends name.
He cannot cash the check because it has to go to the mortgage company . The mortgage company will only issue my friend $150 at a time to make repairs.
He is needing to get some workers in there to make repairs and get a renter back in to make the mortgage payments which by the way were always paid on time. What can you do with only $150 at a time? HE told them that check was useless and he will have to make repairs out of his own pocket.

IS this common for the fire insurance to send the check with the mortgage company name also on the check and they have all control over the money? IF this is not common I think my friend needs to change insurance company after all these years.

[Bill Gulley]

Hi, this is the loss payee clause in the note and deed of trust/mortgage. The insurance company names both on significant loss claims, this is common. What is not common is the mortgage company paying out $150.00 each time. Never heard of such a thing!
I'd give them a time about that; however

It should not be a problem getting a contractor to do the work with a lump sum payment upon completion. The mortgage company will have the work inspected before they sign off.

If the Mtg Co. won't be reasonable, you need an attorney, or perhaps small claims court can take care of this depending on their limit in your state. The mortgage company may apply the entire balance to the mortgage, but your friend doesn't have to sign off on that either, so if they go there, it's time again for an attorney. The Ins. Co. is not the problem, it's the Mtg. Co. they should deal with your friend on this matter, especially if they can't live there or occupy while the property is being repaired, if they don't, see an attorney.

A good way to take care of this is to have an escrow agent hold the funds. They can inspect the property upon completion of repairs and disburse funds to the contractor. Good luck, Bill