Home insurance?

Question

i got a check for $8000 from my state farm insurance company to fix my house siding and roofs from hail storm... i kept the money instead of fixing it.. now my house is in a process of forclosure.. what's gonna happend to me? do i have to give back $8000?

thanks

Answer 1

Well, obviously, State Farm isn't going to pay any more damage to the outside of the house.

and also obviously, the house is worth at least $8,000 less.

When it sells at auction, you're STILL responsible for the difference . . . which MIGHT be a way lot less, with unrepaired damage.

so I think it's just going to increase your loss, maybe by $20,000 or $30,000.

Answer 2

Was the original check issued to you and your mortgage company? If so, then the mortgage company may come after you for the cost of the repairs.

If your mortgage company was not put on the check and it was issued to you only, then most likely the mortgage company will come after State Farm to pay for the repairs again. However, State Farm will then pursue you for repayment.

So, yes - you either got to get the work done or give the money back. Should have used the money for it's intended purpose in the first place and avoided this whole mess.

Answer 3

depending on state law and your mortgage contract, you could be sued for any deficiency between the amount owed, plus interest, and the final sale price of the property less fix-up costs.

which might well be a lot more than 8k.

google your state's foreclosure laws, dude. they're almost certainly online. look for the part about "deficiency"

***
to amplify the part about foreclosures and selling cheap ... I personally know a foreclosure speculator here in Florida. He flat will NOT bid more than 40 cents on the estimated 'fully repaired' dollar of value on a foreclosure.

Atm, most foreclosures are being taken in by the lender for the amount owed. This does NOT extinguish your potential liability for a deficiency judgment -- only delays it until after they get the place fixed up and then sell it.

Btw, interest continues to accure while this process goes on. In Florida, I believe the bank gets 10% interest beginning from the day of the foreclosure auction even if your loan was for 7%.


ugh

:-)

Answer 4

Funny... I went through the same thing.. when i filed bankrupt in 05. i listed my mortgage company (you have to) year or so later i got a check from my insurance company to fix my roof from hails damage like yours. i kept the money. had a forclosure. and i was fine.. no problem yet. but remember.. i filed bankrupt a year early before i got the money and forclosure!!!

Answer 5

In a way you will. If you let it get to foreclosure, they will sell it at auction. You will be responsible for any shortfall between what they get and what you owe. If the house has $8,000 in damage it is likely to fetch $8,000 less than if you had fixed it.

You should do anything you can to avoid foreclosure. They will sell it CHEAP and you will owe the difference.