SS With Insurance Claim
I am in the very early stages of working a short sell. The package has not been sent in yet. This weekend the hurricane took down the screened pool enclosure. The owner has forced insurance.
Is there anything I should know? Seems silly to get the screen fixed. The house is in the 700k+ range and needs a ton of work already.
Could the owner just sign the insurance check over to the mortgage company as part of the SS arrangement?
Any other ideas or experiences with insurance claims during the SS process on a house that needs lots of repair?
Brenda
Insurance disbursments are rarely, if ever, payable to the homeowner. They are made payable either to the mortgagee, and/or the mortgagee and mortgagor.... and/or include the contractor who has been retained to effectuate the repairs.
The lender would much rather the cash than having repairs made.
Yes, my insurance claim was made out to me as the homeowner and the mortgage company.
Guess you answered my question, that the lender would rather have the cash. So having the owner sign over the check to the lender, without having the repairs made, could be part of the SS proposal.
Brenda
Contractually, such insurance settlements as discussed here are made to the First named insured and any other "loss payees" (a mortgage company, for instance). And, when applicable, a contractor(s) may also be a party.
If the contract is a "replacement cost" type, most will have the ability to settle the claim at "actual cash value" until the repairs (or replacement) is made. If you (or the mortgage company)is "settling" versus repairing/replacing, this may affect the amount of the settlement. Food for thought before you decide how to handle any disbursement...[ Edited by norrist on Date 09/07/2004 ]
I've been wondering about short sales on the hurricane properties, too. A lot of folks are just now realizing that current law forces them to pay their deductible (2-5% of the home's appraised value for hurricanes!) as many times as the home has been hit.
For example, if someone's duplex was damaged in Charley, and hadn't yet been fixed before Frances hit, they would have to pay up to 10% of their home's value to have any repairs done - and that just is NOT feasible for most people. And now we have a THIRD! Many people will never see any insurance money, due to the deductibles, and they will have serious money problems to contend with - and no livable home.
Is it wrong to assume that that kind of situation is almost the perfect candidate for a short sale? Do the folks have to actually be 90 days behind on their payments before you could step into the process?
I'm going to wait until after Ivan, and see whether I can help some folks out on the Gulf coast.
[addsig]