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#1719072 - 07/11/12 05:42 PM Flood Loan Question
Wishful Thinker Offline
Member
Joined: Dec 2008
Posts: 77
Help..........Have loan with flood insurance. Insurance company paid on flood claim. Insurance company sends us the check. Can't we pay off our loan with that check and give remainder to customer since we have a lien on it?

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Flood Compliance
#1719131 - 07/11/12 07:27 PM Re: Flood Loan Question Wishful Thinker
Al Miller Offline
Diamond Poster
Al Miller
Joined: Oct 2000
Posts: 2,416
Pleasanton CA USA
Can??? Of course you can, but is that what is best for everyone?

Wouldn't it be better for your customer to be back in their home paying interest on their loan with you? Is it that easy to find a new loan in your area to replace this one?

Al
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Al Miller, CRCM
Opinions expressed are my own and not necessarily shared by my employer.

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#1719253 - 07/12/12 07:37 AM Re: Flood Loan Question Wishful Thinker
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,226
Galveston, TX
I would not be so quick to say yes, unless you want to get sued. Unless the current loan is in default, what gives you the right to keep the insurance proceeds to pay off the loan. The bank could ensure that the required repairs are made to the structure to protect collateral values, but without a default, the bank is not automatically entitled to the proceeds. If my house floods and I get a check for $100,000 and my loan is current and the bank takes the check to pay off the loan and I am left with a ruined house and no funds to repair it, I can guarantee you that action is going to cost the bank a lot more than $100,000 when I get done in court.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1719271 - 07/12/12 12:28 PM Re: Flood Loan Question rlcarey
Wishful Thinker Offline
Member
Joined: Dec 2008
Posts: 77
Thank you both for the input. Made me see it from the customers point of view, for which I failed to do in the first place. Appreciate the help.

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