Homeowner Unable To Promptly Repair H2O-Damaged Home Says Loan Servicer Squeezed Him By Pocketing Insurance Proceeds, Dragging Feet On Fix-Up Pay-Outs

In Orlando, North Carolina, WSOC-TV Channel 9 reports:

• More homeowners are finding their lenders are holding money and calling the shots when it comes to insurance settlement checks for repairs. Action 9’s Don Griffin said it’s a growing trend prompted by the foreclosure crisis.
• Danielle Goodall and her family have been camping in their Orlando home for nearly six months. “I'm at a loss right now,” Goodall said. “Just throw my hands up, don't know what to do.” Last October, a huge plumbing leak soaked their wood floors, walls and kitchen cabinets. The leak was fixed and, within 10 days, the couple had a check from their insurance company that covered all repairs.
• The $18,000 check was made out to the Goodalls and their lender, US Bank Home Mortgage. Instead of endorsing the check, the lender kept the money, Goodall said. Then, Goodall said, the lender insisted on seeing every contract, approving every contractor and inspecting each phase.
• Goodall said she never expected the lender to be in charge of her renovation. She said there were constant delays and that she once waited a month for the lender's inspection before work could continue.
• Consumer groups say situations like this one are the new normal. Since the foreclose crisis, lenders that rarely exercised control over insurance settlements routinely get involved. "The bank certainly has an interest in making certain that their asset that collateralizes their loan is repaired the way it should be,” one advocate said.
• But despite never missing a mortgage payment and having a good credit rating, homeowners like Goodall will now have to wait for their lender's approval to get repairs done. “How am I supposed to fix the rest of the house without the money?” Goodall said.

Source: Homeowner Surprised By Lender’s Role In Renovation.