Why can’t I apply my fire insurance check to my mortgage?
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Why can’t I apply my fire insurance check to my mortgage?
My lender is holding onto a fire insurance check for $235,00 that I would like to apply to the mortgage so i can sell the property as is and start fresh. I still owe $280,000 on the mortgage and my land is worth $60,000. It’s been over 1 1/2 years. Every time I call them I get the run around now they are saying that they will not apply the insurance check until the mortgage is paid in full. I have been living with relatives and would like to start my life over.
Asked on August 2, 2012 under Real Estate Law, New Hampshire
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
The reason why you probably cannot apply your insurance settlement check to your unpaid mortgage is that the mortgage probably has a provision within it stating that the security for the loan if damaged and there is an insurance pay out must be repaired with insurance funds.
As such, I suggest that you carefully read your mortgage (trust deed) on the issue you are writing about. Most likely your answer will be there.
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