When you’ve been in the industry as long as we have, you’re bound to run into issues with the mortgage endorsement process. The best way to handle this issue is to be proactive about it and make sure your customer is aware of a possible issue before the insurance check is cut.
What is mortgage endorsement?
The insurance company will issue a payment to everyone who has a financial interest in the property. If your homeowner’s mortgage is in escrow, his or her lending company will also be listed on the insurance claim check from the insurance company.
What is the problem?
The bank will not cash the check without a signature from everyone involved. This means that before you can accept the check as a job deposit and/or a final payment, the check will need to be endorsed by the lending company as well as the homeowner.
This process can be quite the undertaking for you and your homeowner and can cause some lengthy delays due to the stringent nature of mortgage companies when involving an insurance claim.
Have your homeowner follow these tips to help streamline the process:
1. Before sending it to you, have the customer look at the insurance claim check to see if their mortgage company is listed.
They need to look specifically on the payee section of the check.
If a mortgage company is listed:
- Have your customer verify that the listed lender is their current lender. The customer should call the listed lender to confirm with them, as it is possible the mortgage was sold, and the customer hasn’t yet been informed.
If it has been sold, the customer needs to call their insurance carrier (their agent, someone in the claims department, or their adjuster should be able to handle this) and request that the mortgage company info be updated.
- Has the mortgage been paid in full? Most mortgage companies will NOT endorse a claim check if they are listed as a payee, but the mortgage has been paid in full. A lot of times the insurance company just didn’t find out that a mortgage was paid in full. Have the customer call the insurance carrier to update this information.
2. If the correct mortgage company is listed, the homeowner needs to call the mortgage company for guidance (they will need the insurance claim check and insurance claim amount before making the call).
This will give your customer and you a better idea of the process.Have the homeowner ask if the mortgage company offers:
- Local branch endorsement– the homeowner can take the check into a local bank branch and have the branch manager endorse it. (This option saves a lot of time and headaches for both the homeowner and you.)
- Central processing center – if the customer needs to send the check to a central processing center for endorsement, make sure they ask if they need to endorse the check before sending it.
Depending on the mortgage company processing procedure, they may require that the check be deposited into a monitoring account, meaning it will need homeowner endorsements before they receive it.
Note: If the check doesn’t have the required endorsements, the check will be sent back to your customer without endorsement (and will drag the process out for a week or more).
To avoid time-consuming delays, the homeowner should maintain regular contact with the mortgage company when waiting for a check to be endorsed and sent back.
Once the homeowner has resolved the mortgage endorsement, they can give to you as payment.