Monitoring helps identify and prevent fraudulent claims. Insurers look for inconsistencies or unusual patterns that might indicate fraudulent activity, while ensuring that all the details of your claim are accurate and truthful.
There are a couple of reasons as to why a mortgage company will monitor your claim. When a claim is being monitored, the mortgage company has additional requirements regarding your particular claim before they are able to release any funds. Such requirements can involve additional documents, inspections and contractor issued documents.
- Total claim amount or RCV (Replacement Cost Value) surpasses the standard $40k monitoring threshold:
Every claim is issued an insurance adjuster's worksheet or scope of loss where the estimate of the damages are broken down in order to determine the value of the damages and how much it will cost to repair them. We will see a total RCV, which is what the mortgage company goes by to know an approximate total of the claim. If this amount surpasses a total of $40,000.00, it is determined that this claim will be monitored, as it surpasses the standard monitoring threshold. - Loan being delinquent (late on payments):
In the claim, we will ask if the property owner has been late on payments. If they answer YES, it will automatically be marked as a monitored claim as this classifies your loan as delinquent at the time of loss. Even if the amount of the claim is less than the standard $40,000.00, they will classify it as monitored and have additional requirements.
NOTE: If the property owner DOES NOT answer honestly to this question, we might process the claim as non-monitored, and not ask for the correct endorsements. The mortgage company will return the check due to missing endorsements and the process will need to be restarted correctly. - The mortgage company has a lower monitoring threshold than the standard $40k amount:
Although it is standard practice for mortgage companies to have a threshold of $40k, there are a couple of exceptions to this rule. - Your loan has recently been transferred:
Mortgage companies can transfer their loans to different servicer providers in order to manage their claims in a faster and more effective way. If this is the case, when the claim is submitted, the new servicer will undergo a series of steps in order to classify the claim. This includes includes looking at the loan history, more specifically, if the loan was delinquent at the time of the loss. If your loan is found to be delinquent during the time of the loss, they will mark the claim as monitored. If this is the case, we will need new documents for the new mortgage company.
Wet signatures
Certain documents may be monitored due to the requirement of a wet signature.
A wet signature is a physical, handwritten signature that confirms your acknowledgment and agreement to the terms of the claim or disbursement. This requirement ensures legal and procedural compliance, particularly when large sums of money are involved.
Escrow Process
When the claim involves a significant amount of money, the insurance payout may be deposited into an escrow account managed by your mortgage company. This process provides additional oversight to confirm the funds are used exclusively for repairs and restoration. Find more information about escrow accounts in our related KB!
Issuance of new checks
As repairs progress, new checks will be issued by the mortgage company directly to the contractors or to you and your contractor as co-payees. These checks are often released in stages to match the progress of the work. This incremental disbursement process helps ensure that all parties are aligned and that the funds are distributed responsibly.
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