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Financial Companies
(such as Mortgage Companies) are requiring clearances

Over the years performing mitigation work on homes, we've had some Financial Institutions come to ensure that we had the structure dried before releasing the insurance proceeds for the mitigation work. Then the Financial Institution would start working with the homeowner and building contractor for repairs after receiving a clearance letter or certificate that the mitigation had been performed to industry standards.

Here's why Financial Institutions (such as mortgage companies) are requiring clearances on a home that suffered a water damage or smoke damage, before releasing the insurance proceeds:


1. Insurance Proceeds and Mortgage Companies: 

  • If you have a mortgage, your home is collateral for the loan. Your mortgage company has a financial interest in the property.

  • When your home is damaged, insurance payments are often made jointly to both you and your mortgage company.

  • This arrangement ensures that your lender's interest in the property is protected.


2. Preventing Misuse of Funds:

  • Mortgage documents are designed to prevent homeowners from cashing insurance checks and then disappearing without rebuilding.

  • By co-insuring the property, the mortgage company ensures that you use the insurance proceeds for mitigation and reconstruction

  • Until the mortgage company releases its claim on the funds, the money remains in their account.

3. Standard Process:

  • Typically, every insurance check (especially Coverage A checks) will be made payable to both the homeowner and the mortgage company.

  • The homeowner will endorse/sign the check, and the mortgage company will deposit the check into their account.

  • Once you begin the mitigation and rebuilding, the mortgage company will release the funds to the homeowner. The funds paid first will be the mitigation work first after receiving a clearance letter or certificate (This should be a IICRC Certified Technician acting as a third-party to perform the clearance) from the person performing the clearance inspection. 

As financial institutions start requiring clearances on homes, the following will soon follow for their financial protection: Mitigation Service Companies, Insurance Companies, Restoration Companies, Plumbers, Building Contractors and many more.

So, if you are in the situation of needing a clearance on your home for a mortgage company, don't hesitate to call or email DAVHENCO INC.

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