When you’ve been in the industry as long as we have, you’re bound to run into issues with the mortgage endorsement process. So, let’s go over what you and your customer will need to do, starting with the basics.
What is a 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 cause some lengthy delays due to the stringent nature of mortgage companies when involving an insurance claim.
What should you do?
Get ahead of the problem. Tell your homeowners about the potential issue before they even get the check. If they know what to look for, they’ll be able to act faster.
How should you prep your homeowner?
Before sending you the insurance claim check, your customer needs to look to see if a mortgage company is listed on the payee section. If a mortgage company isn’t listed, great, send it to you.
However, if a mortgage company is listed, he or she will need to:
- Know if the mortgage has 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.
– Your customer will need to call the insurance carrier to update this information.
- Verify that the listed lender is their current lender. Your customer should call the listed lender to confirm with them, as it is possible the mortgage was sold, and the customer hasn’t been informed yet.
– If it has been sold, the customer needs to call the insurance carrier (the agent, someone in the claim department, or their adjuster should be able to handle this) and request that the mortgage company info be updated.
- Call the mortgage company. If the correct mortgage company is listed, your homeowner needs to call the mortgage company for guidance (he/she will need the insurance claim check and insurance claim amount before making the call).
o 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.)
- 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
- 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, your homeowner should maintain regular contact with the mortgage company when waiting for a check to be endorsed and sent back. Once the mortgage endorsement issue is resolved, he or she can give the check to you as payment.