Need a new roof - but battling to strip our 2nd mortgage - HELP?

[cspa522]

We are confirmed, as of February, in our 60 month Chapter 13 plan. Currently we are battling with our 2nd mortgage company, who filed a complaint/adversary proceeding (HSBC Mortgage). There is a court date set for August 2nd, and it's a default order setting. I think this is good for us, because doesn't that mean that because HSBC hasn't responded to the claim/objection we filed against them, that the judge is just going to say "HSBC, you're out of luck" and rule in our favor?

My REAL QUESTION, however, is this: Yesterday our insurance adjuster came out, after lots of recent hail storms and tornadoes in our area, and told us we do in fact need a new roof, gutters, and some window screens. No arguments, nothing. Just plain "Yeah, you guys have damage worth fixing." They wrote up the claim and proposal and all is fine. We can pay our deductible out of the emergency fund we have set aside.

However, we have to have the mortgage companies sign off on the check from the insurance company in order to pay the roofer, and my atty says it might be a problem because we are in BK and currently going to court against HSBC (who is objecting to our desire to strip the 2nd).

Has anyone ever dealt with this kind of situation? Ideally I'd think (as does my atty) that the mortgage companies will want to replace the roof to protect the asset (the house), but they might not be so agreeable right now to this.

What can I do to help see this happen? Our roof leaks into my daughter's bedroom and the insurance company has even suggested we'll need to replace carpeting in there, or at least have it professionally cleaned.

Thank you!

Carrie

[malf1204]

I believe that if you sign a contract with a roofing company to do the work the insurance company will make the check out to you and the roofing contractor. They just want to make sure you are not spending the money on a vacation but fixing your roof with it so they are not liable to any lien holders.

[Flamingo]

I believe that if you sign a contract with a roofing company to do the work the insurance company will make the check out to you and the roofing contractor. They just want to make sure you are not spending the money on a vacation but fixing your roof with it so they are not liable to any lien holders.

Your homeowner's policy will explain how insurance payments for claims are normally handled and how payment is made and in what names. Your mortgage company is listed as a lienholder on your homeowner's policy so they may be requird to list them as a payee. Normally that would not pose an issue- your bankruptcy is the big issue as this incoming check is coming in during your Chapter 13 which is viewed as insurance proceeds. Your attorney may need to get the trustee involved so your roof can be repaired so you can continue to live there - you will probably have to prove that those funds will be paid to a contractor for the work done.

[malf1204]

I am originally from St Louis and back in the late 1990 there was a big hail storm in North County and all of the homeowners took the money and spent it on other things instead of fixing the roofs. The roofs started to leak and the banks went after the insurance companies for making the check to the homeowner. So once again a few bad apples spoiled it for the rest of us.

[cspa522]

The check will be made to the mortgage companies and then they are responsible for turning it over to us. Maybe there's a way they can just send it directly to the roofer and avoid us altogether, or we can send a receipt or some proof that we used it for the roof?

Does anyone know what our chances are that they're going to reject this (HSBC or Citimortgage) and we will end up having to pay for the new roof ourselves?

[malf1204]

The mortgage company cannot simply keep the money it must be used to repair the house. Did you ask your insurance company if they will make it out to you and a roofing contractor and leave the mortgage companies off? It is technically insurance fraud if the proceeds are not used for repair.

[cspa522]

The mortgage company cannot simply keep the money it must be used to repair the house. Did you ask your insurance company if they will make it out to you and a roofing contractor and leave the mortgage companies off? It is technically insurance fraud if the proceeds are not used for repair.

I know this. But we're worried that they will take a look at our account, realize we owe them money, and try to keep it to make up for the funds that we owe them. Thus dragging us back into court to get the money back...and it's a whole vicious cycle.

Right now I'm considering just calling my trustee's office directly to see if they have any advice for me. Is that advisable or no?

Thanks to everyone for their responses!

[cspa522]

Also, I have no intention whatsoever of just taking the money and running. We need the roof, gutters, and window screens fixed. It's not an option. I just want to get it done with as little fuss as possible!

[MOMof3]

We had storm damage and Chase--probably one of the worst banks around in my opinion--signed our check over to us. We have arrears in our plan and had a credit card with them as well--we had NO problem. Hopefully you will be ok!

[cspa522]

We had storm damage and Chase--probably one of the worst banks around in my opinion--signed our check over to us. We have arrears in our plan and had a credit card with them as well--we had NO problem. Hopefully you will be ok!

I sincerely hope so! Thank you for the words of encouragement!

[chicagoed195]

Not suggesting this is the answer, but a number of years ago I had hail damage to the tune of about $25,000. New roof, siding all around, gutters, chimney cap etc. The check came directly to me from the insurance company payable to us, the mortgage company and the contractor. I endorsed the check and gave it to the contractor. I think he more or less said he wasn't inclined to wait for the mortgage company to send it back. I think he just deposited the check and took his chances that it would clear.

[cspa522]

Not suggesting this is the answer, but a number of years ago I had hail damage to the tune of about $25,000. New roof, siding all around, gutters, chimney cap etc. The check came directly to me from the insurance company payable to us, the mortgage company and the contractor. I endorsed the check and gave it to the contractor. I think he more or less said he wasn't inclined to wait for the mortgage company to send it back. I think he just deposited the check and took his chances that it would clear.

Probably won't go that route. But curious - what's the implication to YOU if the contractor doesn't get all the endorsements? Isn't that on them and not your problem if they didn't bother to get everyone to sign off on it?

We're going to just proceed and hope this doesn't become a problem. Thanks everyone, and if there is more advice out there, keep it coming. I'll never turn it down!

[chicagoed195]

It was years ago, but I believe the insurance company sent the check to the mortgage company and the mortgage company then sent the check to me for endorsement with a form the contractor was supposed to fill out to forward the check back to the mortgage company. If there was any legal entanglement it would have been with the contractor.