Understanding the Insurance Claim Check Process with Mr. Cooper

Dealing with home damage and insurance claims can be stressful. If your mortgage is through Mr. Cooper, it’s important to understand how to handle insurance claim checks to repair your property smoothly. This guide will explain:

• What is an insurance claim check?
• When the check comes to you versus the lender
• Step-by-step process if Mr. Cooper receives the check
• Required documents you’ll need to provide
• How funds are disbursed for repairs
• What to do if your check amount is over $40k
• Options if you can’t afford your mortgage payment during repairs
• Tips for avoiding contractor scams during rebuilding

What is an Insurance Claim Check?

An insurance claim check, also called loss draft funds, is sent by your home insurer to cover damage repairs after an incident like fire, flood, or storm damage.

The check will be made out to both you (the homeowner) and your mortgage lender. This ensures the funds are used properly to fix your home so it retains its value as collateral on the loan.

When Will the Check Come to You Versus the Lender?

There are two potential scenarios:

1. Check issued directly to the homeowner

If the damage is minor, your loan is in good standing, and the check is under $40,000, the insurance company may send the funds directly to you.

In this case, you can deposit the check yourself. Be sure to use the money only for approved home repairs and keep all receipts.

2. Check issued to lender

For more significant damage, delinquent loans, or large checks over $40,000, the insurance company will likely make the check payable to both you and Mr. Cooper.

If this happens, you’ll need to go through the lender to access the money. This ensures proper oversight of the funds for rebuilding.

Step-by-Step Process if Mr. Cooper Receives the Check

If Mr. Cooper is listed on the insurance claim check, follow these steps:

1. Endorse the check: Sign your name on the back of the check, showing you approve the lender’s involvement.

2. Mail the check to Mr. Cooper: Send to one of these addresses depending on delivery method:

   • Regular mail:

     • Mr. Cooper
     • Attn: Loss Drafts Department
     • PO Box 6501
     • Springfield, OH 45501-6501

   • Overnight mail:

     • Mr. Cooper
     • Attn: Loss Drafts Department
     • One Assurant Way
     • Springfield, OH 45505

3. Provide required documents: Mr. Cooper will need additional paperwork on the damage and repairs before releasing funds. Common requirements include:

   • Insurance adjuster’s worksheet estimating repair costs
   • Signed contract/proposal with your contractor
   • Contractor’s waiver of lien
   • Contractor’s W-9 tax form
   • Copy of the contractor’s license

4. Mr. Cooper reviews and disburses funds: The lender will examine the check and documents. Then they will either:

   • Endorse the check and return it to you to coordinate repairs

   OR

   • Deposit the check and issue incremental payments to you as work is completed. This may happen if damage is extensive.

5. Use funds for approved repairs: Finally, you can work with contractors to start rebuilding your home using the disbursed money. Be sure to keep all repair receipts and invoices.

Required Documentation From Contractors

When providing repair documents to Mr. Cooper, make sure contractors include:

• Itemized estimate: A detailed, line-by-line estimate of project costs. This should match the final invoice.

• Waiver of lien: The contractor waives right to place a lien on your home if you fail to pay. This protects Mr. Cooper’s financial interest.

• W-9 tax form: For tax reporting purposes on payments from the lender.

• Business license: Copy of the contractor’s current license confirming they are registered with the state.

Having these items from contractors ensures the lender can release funds properly.

How Insurance Claim Funds Are Disbursed

Once Mr. Cooper has the check and repair documentation, funds can be disbursed in two ways:

Lump sum

• For smaller projects or loans in good standing, they may endorse the full check back to you for repairs.

• You’ll be responsible for paying contractors from the lump sum as work is completed.

Incremental payments

• For larger repairs or delinquent loans, Mr. Cooper may manage funds more closely.

• They will deposit the check and issue you payments incrementally as phases of repair work are finished.

• This way they can ensure work is progressing and money is used appropriately before disbursing the next installment.

What to Do if Check is Over $40,000

In some cases after major disasters, the insurance claim check may exceed $40,000.

If this happens:

• The insurance company will likely make the check payable to both you and the lender.

• Mr. Cooper will require extensive documentation on repairs before releasing funds in phases.

• Be prepared for the lender to hold back most of the money until repairs near completion. This protects their collateral interest.

• Keep communicating with your mortgage officer on the rebuilding timeline so funds can be coordinated.

Assistance Options if You Can’t Afford Payments During Repairs

If the home damage means you can’t afford your regular mortgage payment during repairs, contact Mr. Cooper immediately.

Ask about their disaster forbearance program. This may allow you to:

• Temporarily suspend or reduce mortgage payments.

• Avoid late fees or credit impacts.

• Extend the repayment period.

Forbearance won’t erase what you owe. But it can ease the financial stress so you can focus on rebuilding.

Tips for Avoiding Contractor Scams

After disasters, dishonest contractors unfortunately prey on stressed homeowners needing urgent repairs.

Here are tips to avoid repair scams as you use insurance claim funds:

• Check credentials: Verify contractor licenses, insurance, and bonding. Look for complaints with the state licensing board.

• Avoid door-to-door offers: Legitimate contractors won’t pressure you on the spot. Take time to review multiple bids.

• Don’t pay upfront: Avoid paying more than 10-15% upfront or get locked into payments before work starts.

• Get everything in writing: Require a detailed contract on timeline, materials, price, change orders, and warranty.

• Watch for cheap bids: Very low bids may signal shoddy work or a scam. Compare to reasonable prices.

• Pay by credit card: For added fraud protection if problems arise. Never pay full amount in cash upfront.

Staying informed on the insurance claim check process can make repairs less stressful if disaster strikes. Follow the steps for Mr. Cooper, provide documentation, and use funds properly. And know they’re there to help you recover and rebuild your home.