Is it legal for the mortgage company to keep the insurance money?

Question

I purchased a foreclosure on August 29th. After we had done a final walkthrough. Once we moved in we realized that there was hail damage to the roof from August 26th, (our new neighbors told us a hail storm came through) We had the roof checked out and sure enough the roof was damaged. (Not visible from the ground or at walkthrough) We contacted the Mortgage company's insurance, they came out and assessed it and aproved a payment for repair. Now the mortgage company is refusing to pay, they are keeping the money to cover what they lost in the short sale on the foreclosure. Is this even legal?

I had an inspection prior to the hail storm. I did not know a hail storm had came through until I had moved in and found out from the neighbors. There was noone living in the house so the sellers were not aware of the storm either. During the walkthrough there was no way from the ground I could tell there was any damage to the roof. Even when up there recently I was unable pointed out to me

Answer 1

No it isn't legal, since the approved payment for the repair, but you need an attorney specializing in real estate law. Don't attempt to do this yourself, you will get nowhere.

Answer 2

Both of you seem to have a good case. This could fall under the "act of god" area. If the damage is small then it is not worthwhile to pursue a few hundred dollars. You need to pay legal representation, court costs and other legal expenses. You are better off putting the money into fixing the roof. Cost it out either way to see where to go. In this case, let the total expense decide for you. Both your lawyers might ask you to settle out of court. Remember that you each still have to pay the lawyers no matter whether it goes to court or not.

Answer 3

I think the best thing for you to do is contact a real estate attorney in your area