If your carrier finally cut a check and your mortgage company froze it, you’re not alone. It’s a gut punch. Your contractor wants a draw this week, permits are in motion, and you can’t get a straight answer.
What you’re thinking right now
- “My insurer finally paid. Why is my mortgage servicer freezing the money?”
- “Will my contractor walk if I can’t get a draw this week?”
- “If I’m one payment behind, can they keep all the insurance proceeds?”
- “How long can a mortgage company hold an insurance check before releasing it?”
What’s really happening
- Most mortgages require insurance checks to include the servicer as a payee. The servicer then runs a “loss draft” process to protect the property (their collateral) before releasing funds.
- Speed depends on: who owns your loan (Fannie, Freddie, FHA, VA, or portfolio), claim size, whether you’re current or delinquent, permits/inspections, and whether your packet is complete.
- You’re not alone. This can feel like a second disaster. Our job is to get you from payout to rebuild fast—without jargon or games. Our goal is to help you pursue the benefits available under your policy. Outcomes vary; expect responsibility for deductibles and any non-covered costs.
Your 24‑Hour Fast‑Track Plan: Start the Release Clock Today
1) Identify the players and the rules
Call your servicer and ask: “Who is the investor on my loan—Fannie Mae, Freddie Mac, FHA/HUD, VA, or portfolio?” Write down:
- Investor name
- Loss draft case number
- Direct email/fax for the Hazard/Loss Draft Department
- Your single point of contact (name/extension)
Download the servicer’s Hazard/Loss Draft packet/checklist from their website.
2) Assemble a complete packet before you send anything
A complete, labeled packet shaves days off review. Use the checklist below and name your files clearly.
3) Submit via two channels today
- Upload through the servicer’s portal and overnight the same documents via certified mail or FedEx.
- Subject line and cover sheet: “LOSS DRAFT – [Property Address] – [Loan #] – REQUEST FOR INITIAL DISBURSEMENT.”
4) Set your follow‑up cadence
- Calendar check-ins for business days 2, 5, and 7.
- On each call, ask: “Is my file complete? What draw amount is approved? What’s the inspection date? When will funds go out and by what method?”
5) If your check still needs endorsement
- Ask for an in-branch endorsement appointment or trackable mail-in instructions.
- Include copies of IDs for all borrowers and the insurer’s check stub.
The Loss Draft Packet That Gets Green‑Lit
Include these in one PDF (or clearly labeled files):
Identity, ownership, and loan info
- Front/back copy of the insurance check
- Loan number and property address
- Mortgage/deed of trust page with the loss payable clause
- Photo ID(s) for all borrowers
- Power of attorney/trust docs if applicable
Claim documentation
- Full insurer estimate (Xactimate or equivalent)
- Proof of Loss (if used)
- Payment letter breaking out ACV vs. recoverable depreciation
- Policy Declarations page
- Any engineer/adjuster reports
- Photos of damage
Contractor documents (align with local rules)
- Signed contract with scope matching the insurer estimate
- Milestone-based draw schedule
- Contractor’s license and W‑9
- Certificate of insurance (GL and workers comp) listing the property address
- Local business license if required (e.g., City of New Orleans/Jefferson Parish; Harris County/Houston; City of Gulfport/Harrison County; City of Atlanta/Fulton County; Boston ISD)
- References if requested
Permitting and readiness
- Pulled permits or application receipts
- HOA/condo approvals
- Materials deposit invoice/lead times (e.g., impact windows/roofing)
Disbursement request
- Cover letter requesting a specific initial draw (often 30%–50%)
- Wiring instructions
- Your preferred inspection contact and windows for access
- Request to waive inspection if under the investor’s threshold
Optional but powerful
One-page “Rebuild Plan” summary: timeline, milestones, photos. It humanizes the file and reduces back-and-forth.
Know the Rules Your Servicer Lives By (So You Can Use Them)
Typical release frameworks
- Small losses: checks under roughly $10,000 are often endorsed back to you with minimal review.
- Larger losses: funds go into a restricted account and release in draws tied to inspections (for example, 33% to start, 33% at 50% completion, balance at 100%).
Current vs. delinquent status
- Current: more flexible draws and possible inspection waivers under certain thresholds.
- Delinquent/forbearance: tighter controls and more inspections. Servicers generally must follow investor/servicer guidelines; how proceeds are applied depends on those rules and your loan status.
Investor overlays that matter
- Fannie Mae/Freddie Mac: published hazard-loss guidelines control draws and inspections. Ask the rep to cite the investor guideline and threshold.
- FHA/VA: HUD/VA handbooks add inspection protocols. Ask for their FHA/VA loss draft checklist if your loan is government-backed.
Concrete fast-track tactics that work
Pre-empt the top reasons files get kicked back
- Align scope: make your contractor’s line items match the insurer estimate or include a short variance table.
- Send W‑9 and COI up front: missing these stalls many files 7–10 days.
- Show permits or proof of scheduling to avoid “awaiting permit” limbo.
Compress the inspection timeline
- Offer immediate windows and multiple contact numbers.
- Ask if a virtual inspection with time-stamped photos/videos is allowed.
- Ask which field vendor they use (e.g., Safeguard, Altisource) and call proactively once assigned.
Ask for a larger initial draw with proof
Submit materials quotes and special-order deposit invoices to justify 40%–50% up front.
Fix name/payee mismatches before you mail checks
If an old lender or a deceased co-borrower is listed, request insurer reissue or include probate/organizational docs with your endorsement plan.
Keep everything in one thread
Use a persistent subject line and put your loan number and loss draft ID on every page footer.
Phone/email scripts and the escalation ladder
First call to Loss Draft Department
“I’m calling to confirm receipt and completeness of my hazard loss packet for [address/loan #]. I’m requesting an initial [X%] disbursement based on the signed contract and materials invoices. What’s the service-level timeline for review and inspection scheduling? Who is my single point of contact?”
What to ask on every follow-up
- “Is my packet marked complete? If not, what exact document is missing?”
- “What draw amount is approved today?”
- “What is the inspection date/time and vendor?”
- “When will funds go out and by what method (check or wire)?”
Escalation path with deadlines
- Team Lead → Loss Draft Supervisor → Executive Resolution/Office of the President.
- You may consider a CFPB complaint if reasonable follow-ups fail. Attach your paper trail.
Regulatory hammer when needed (written, certified)
Send a RESPA Notice of Error/Request for Information (12 CFR 1024.35/.36).
- RESPA sets response timelines (commonly 5 business days to acknowledge and 30 business days to respond, with limited extension rights). Confirm the current rule.
- Ask for: investor identity; complete loss draft policy; all reasons for any hold; exact cure steps; the current status of your disbursement.
Common roadblocks and fast cures
“We need lien waivers” before the final draw
Provide conditional/unconditional lien waivers tied to paid invoices at each milestone.
“The claim is ACV only; where’s the recoverable depreciation?”
Show active repairs and ask the insurer to release depreciation; send the updated payment letter to the servicer.
Stale-dated or lost checks
Request reissue from the insurer; ask the servicer to flag your file so you can overnight to Loss Draft (not the general lockbox).
Multiple payees (HOA/2nd lien/estate)
Get a written waiver/payoff from junior lien or HOA; for estates/trusts, include Letters Testamentary/Trust Certificate and an endorsement plan.
Behind on the mortgage
Servicers can supervise disbursement but can’t simply keep repair funds unrelated to restoring collateral. Put your hardship facts in writing and ask for a supervised draw plan.
Legal levers when the mortgage company won’t budge
When delay turns into damage
Unreasonable, arbitrary holds that stall repairs may violate RESPA, state unfair/deceptive acts laws, or the mortgage contract. We can seek court orders to compel release.
Where bad faith fits
If your insurer underpaid or delayed, we go after them for bad faith. At the same time, we force the servicer to follow proper loss draft procedures so funds flow.
Paper trail = leverage
Keep a repair journal, date-stamped photos, call logs, emails, and certified mail receipts. Those become exhibits if we have to litigate.
Remedy timeline
Demand letter (10–15 days) → CFPB/Attorney General complaint → suit for injunctive/declaratory relief and damages, including attorney’s fees where statutes allow.
Special scenarios and how to handle them fast
- Total loss vs. partial loss: For totals, tie releases to demo/foundation milestones; include builder contract and plans; expect more inspections.
- AOB or public adjuster involved: Disclose early and send the AOB/PA authorization so the servicer understands payment direction.
- Selling the property mid-claim: Coordinate an escrow holdback at closing tied to final inspection; get servicer approval in writing.
- Investment property or short-term rental: Provide lease/booking interruption proof and push for expedited draws to reduce loss of rents.
Protect yourself with a smart draw schedule
- Don’t front-load payments: Never pay ahead of work-in-place and materials on site. Tie each draw to visible milestones and lien waivers.
- Keep Additional Living Expense (ALE) separate: ALE checks are for you, not your mortgage company. If an ALE payment includes the servicer, ask the insurer to reissue to you only and cite your policy.
- Documentation discipline: Save PDFs with consistent names (Loan#AddressDocType_Date). Photograph every stage. Keep permits, inspections, and delivery receipts.
Local, real-world touches that shave days off the timeline
- Near our Metairie HQ or Houston office? We’ll help assemble, scan, and overnight a complete loss draft packet same day from our office.
- Inspections in New Orleans/Jefferson Parish, Gulfport, Houston, Atlanta, and Boston: Many servicers use third-party vendors. We coordinate with those inspectors to avoid missed appointments and repeat visits. We speak their language and know the bottlenecks.
How Insurance Claim HQ fast-tracks releases
- We quarterback the entire process: We build and submit a bulletproof packet, set hard deadlines, coordinate insurer depreciation releases, manage contractor docs, and schedule/attend inspections.
- We escalate early and often: Executive-resolution lines, investor guideline citations, immediate RESPA letters, and CFPB filings when necessary.
- We’re litigation-ready from day one: If a servicer or insurer crosses the line, we file to compel release and pursue damages. Our goal is to pursue available policy benefits so you can rebuild. Outcomes vary; expect responsibility for deductibles and any non-covered costs.
- Accessible, straight talk: We try cases, but we’re just as comfortable in polos and ball caps until it’s time for court. We fight, we communicate, and we don’t let files die in voicemail.
FAQs we answer every week
- How long can a mortgage company hold an insurance check? There’s no one-size-fits-all deadline, but investor rules require timely, documented progress. Under RESPA, they must answer your written Notice of Error/Request for Information within set timelines. If they stall without valid reasons, we escalate.
- Can my mortgage company keep my insurance check if I’m behind? They can supervise disbursement more tightly, but repair funds exist to restore the property. They can’t just grab them for unrelated fees.
- What is a “loss draft”? It’s the servicer’s restricted account and process for releasing claim funds in draws tied to inspections.
- Do I have to use the servicer’s preferred contractor? No. You need a licensed, insured contractor with a scope that restores the property. Preferred lists are optional.
- How do I endorse a joint insurance check? Most servicers require in-branch endorsement or trackable mail-ins with IDs. Ask for Loss Draft-specific instructions, not the general lockbox.
- What if the contractor’s bid is higher than the insurer estimate? Submit a variance table and supporting documentation. We push the insurer for supplements and the servicer to accept justified scope.
- Can the mortgage company apply my claim check to escrow or fees? ALE should not go through the servicer. Repair funds should be used to restore the property. If they’re misapplying funds, we put it in writing and invoke RESPA.
Your next three steps
1) Download and complete your servicer’s loss draft packet today; send it via the portal and overnight mail. 2) Lock in inspection windows and request a 40%–50% initial draw with materials invoices attached. 3) If you don’t have a firm disbursement date within 10 business days, call us. We’ll step in, escalate, and, if needed, take legal action to get funds moving.
Talk to us—local help, fast action
Free claim and loss draft review at the office nearest you:
- Metairie HQ: 3001 17th Street, Metairie, LA 70002
- Atlanta: 1201 W Peachtree St NW, Suite 600, Atlanta, GA 30308
- Houston: 1 Riverway, Houston, TX 77056
- Gulfport: 204 Courthouse Rd, Suite A, Gulfport, MS 39507
- Boston: 44 School St, 6th Floor, Boston, MA 02108
insuranceclaimhq.com | 844-844-0844
Bring your insurer estimate, the check, and any servicer emails—we’ll build your fast-track plan on the spot. Our mission is simple: help you get back home with the funding your policy allows. Outcomes vary; expect responsibility for deductibles and any non-covered costs.
Attorney Advertising. General information only; not legal advice. Reading this content does not create an attorney–client relationship. Results vary; no guarantee. Representation is limited to jurisdictions where our lawyers are licensed, and we associate with local counsel when required. Contingency-fee representation may be available; court costs and case expenses may be the client’s responsibility as outlined in a written engagement agreement. Coverage outcomes depend on specific policy language and facts—review your policy and deadlines with a qualified attorney licensed in your jurisdiction.
