Why is My Mortgage Company Withholding Funds for Repairs?
The mortgage company retains a financial interest in the property until the loan is fully paid off. Therefore, the release of insurance funds is subject to their rules and procedures.
Every bank or mortgage company has its unique process. They may endorse the check simply, but if the claim proceeds exceed a certain amount or if the loan was not current at the time of loss, they will hold it and release funds in increments.
After that, they will require inspections before releasing further funds. This process ensures that the initial funds sent are used for repairs. They want to confirm that the funds are appropriately utilized, and inspections help them do so.