Don’t Let Storms Shake You

By Marcus McCue, vice president of Guardian Mortgage Co. Inc.

Our parched lawns cry for rain this year, but when the storms come through they are earth-shakers knocking down trees and shredding roof shingles. Many East Dallas homeowners have found themselves a bit windblown as well as they try to make repairs.

Not only do homeowners need to get repairs made to their satisfaction, but often they find themselves needing to coordinate with their mortgage lender and insurance company in a confusing shuffle of estimates, endorsements, adjusters, and multiple checks.

Homeowners often don’t realize that the mortgage lender has an insurable interest in their property and must make sure the repairs are actually made to quality standards. This is why you may see your mortgage company as a co-signer on the check(s) issued by the insurance company. It is part of a system of checks and balances to keep the property — which is the lender’s collateral for the loan — in good condition.

“A relationship with your insurance agent helps a lot when you need to make a claim,” said Alison J. Garner, a seasoned Farmer’s Insurance Agent with clients in East Dallas and throughout North Texas. “Your agent can help you save money, help you locate resources for your repairs, and avoid or prepare for unpleasant surprises.”

For example, homeowners with older homes in East Dallas sometimes find that the entire roof must be replaced: not because of damage, but because their current composite asphalt roof was laid over an older wood roof — one that is not insurable today.

To make the storm recovery process go smoothly, Garner offers the following advice:

  1. Get an estimate before officially filing the claim. You don’t want a claim on your insurance record when the amount of the repair is actually less than your deductible.
  2. Beware of “storm chasers” that come through neighborhoods after a big storm. Many of them offer very low prices for repairs, but if they are not a local, established company you have no way of getting them back to your house if quality is poor. Check them out with the Better Business Bureau.
  3. Call your insurance agent for a list of quality, low-cost roofers and repair people. Remember, insurance companies don’t like to overpay either.
  4. Expect Surprises. Older homes often have electricity, gas, and other out-of-code issues that may need to be addressed along with the main repair.
  5. Get multiple estimates. Not only are you looking at price, but you want to make sure your provider is aware of code and other issues, like the wooden roof, and that you are getting an accurate picture of costs before making a decision.
  6. Be clear with your repair team on the payment schedule ahead of time. The final check is issued after repairs are completed and inspected. If your roofer insists otherwise, then they are not used to working with insurance companies and may not be the best choice for your repairs.
  7. Plan for the mortgage lender’s role in the repair process. When the check(s) arrive, they will have the borrower(s) name(s) and the mortgage lender’s name on the check. The lender must endorse the check prior to its deposit into your account.

On the mortgage lender side, before endorsing the check, the lender will have several requirements that can catch people by surprise if this is their first time:

  • A copy of the insurance adjusters report, including any photos included on the report from the adjuster, if taken.
  • The quote(s) from one or more contractors to complete the work specified by the insurance adjuster.
  • Mortgage must be current — seems obvious, but the lender can withhold approval if the mortgage is 30 days or more past due.
  • If the repairs are extensive, the lender might hold the funds in escrow and manage the repair process rather than the homeowner with payments in stages as the work is completed.
  • If the property is an investment property, not an owner-occupied primary residence, there will be more red tape and scrutiny. There is a significant amount of fraud with insurance checks on investment properties, where the borrower never makes the repairs on the property.
  • The lender has the right to require a final inspection of the property to ensure the repairs have been made.

Marcus McCue is vice president of sales for Guardian Mortgage, which has financed dozens of East Dallas homes, and enjoys mentoring homebuyers to become smart borrowers. Follow Guardian on Facebook for a free e-book on mortgage strategies.

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