What legally can be done if a mortgage company holds insurance proceeds? 1 Answers as of August 12, 2017

A mortgage company holds the proceeds of a property insurance damage claim and then imposes a process for release of said funds that creates additional financial and emotional hardships on the owner/borrower. Is the mortgage company liable for the hardships? Example: Young family with two infants becomes homeless when broken pipe floods home. Insurance pays the claim in full, but proceeds held by mortgage company. To get the funds released the family has to borrow money to pay for the repairs and wait up to 10 days for the mortgage company to inspect the repairs at two different points, extending the families homeless period.

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Greenbaum, Nagel, Fisher & Paliotti LLP | Stephen A. Greenbaum
The process should be spelled out in your insurance policy. Otherwise you should file a complaint with the insurance commissioner who will investigate.
Answer Applies to: Massachusetts
Replied: 8/12/2017
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