What is Loss Draft?
When it comes to any damage to your home, knowing what to do and where to begin can be overwhelming. Fortunately, Carrington is here to help. Our loss draft video is full of information to answer any questions you may have.
It will only take 3 minutes. Check it out!
Still have questions? Connect with one of our online customer service representatives for additional assistance at 800-561-4567.
--VIDEO TRANSCRIPT--
Natural disasters and other accidents cause home damage every year, which requires the homeowner to file a homeowner’s insurance claim. We understand this can be a very stressful situation, and knowing what to do can sometimes be confusing.
In this video, we’ve outlined the process and some of the common concerns homeowners have. If you experience damage to your home, the first step is to report it to your insurance company and file a claim.
In the process of settling the claim, your insurance company may issue an insurance check and name Carrington Mortgage Services, LLC as one of the payees on the check. This insurance claim check is called a Loss Draft check. Until your mortgage is paid off, Carrington has a shared interest in the property as it's collateral for your loan, so it’s important we partner together to ensure repairs are made as swiftly as possible.
A Carrington representative can explain the steps that will need to be taken based on both the status of your loan and the amount of damage sustained. Taking both of those into consideration, the Carrington representative will identify whether your Loss Draft check can be signed by us and released back to you, or if your insurance repairs need to be monitored until they've been completed, which means the Loss Draft funds will be managed by us on your behalf during the completion of the repairs.
We'll mail you a packet with instructions guiding you through the process. Note that there are required documents in the packet that must be completed for the process to continue. Once you’ve reviewed the packet, verified the needed steps to be taken, and all parties have signed the back of the check, mail the check to Carrington according to the instructions you’ve received.
When we receive the check, Carrington will proceed in one of four ways depending on the loan status, amount of loss, and documentation received. If your loan payment has been paid on time during the time of loss and the claim settlement amount is $40,000 or less, Carrington will endorse and return the check to you, so please be sure to mail us the check and a legible copy of the adjuster’s estimate. If your loan was current at the time of loss and the claim settlement amount is greater than $40,000, upon the receipt of required documents we'll issue an initial disbursement payable to you and your contractor, equal to the greater of $40,000, 33% of the insurance loss proceeds, or the amount by which the claim funds exceed the payoff amount of your loan.
Subsequent disbursements of money will be issued based upon the progress of repair work as determined by a property inspection. If you are behind in your mortgage payments at the time of your loss and the claim amount is $5,000 or less your loss draft funds will be released back to you, so please be sure to mail us the check and a legible copy of the adjuster’s estimate.
If your loan was delinquent at the time of loss and the claim amount is greater than $5,000, upon the receipt of required documents we'll issue an initial disbursement payable to you and your contractor in an amount of up to 25% of the total insurance proceeds but no more than $10,000.
Subsequent disbursements will be issued in increments not to exceed 25% of the insurance loss proceeds based on the progress of repairs as determined by property inspection. Unless your claim amount was entirely released, the process of inspections and disbursement of funds will continue until all repairs have been 100% completed.
