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Can Mortgage Lenders hold your insurance money hostage if your home has been seriously damaged ? My parents were affected by the High River floods and received a cheque from their insurance provider promptly. It was made out to both of my parents and Scotiabank (as the mortage lender). Scotiabank is now telling my parents they'll release the money as they see fit. My parents moved into their existing home, unfinished basement, when they received their mortgage. My dad spent the last 10 years developing it (with his own money and time). I do not understand how Scotiabank can hold ANY claim to this money. He may decide to NEVER develop that basement again. He should be able to take that money and use it as HE sees fit...like LIVE. My parents are seniors and living on a fixed and limited budget. What can they do?
The basement was the only thing affected by the flood and it has been gutted.
I am unsure of reasoning which I believe is part of our issue...lack of information. I am guessing that as the mortgage lender (Scotiabank) has an interest in the property then they are entitled to something? I don't know that is why I am asking. My dad's reasoning is when he moved into the house, and they received the mortgage - the basement was undeveloped. The bank is saying, we'll release funds as you develop the basement.
He may never do that again, and when he DID initially develop it - it was not with the banks money/loan help. It was his own. I would like to know how long they can tie up his money? will they keep it? does he have to give an explanation in writing or something to the effect that the basement wasn't developed when he got the mortgage and therefore the house is in the condition he purchased it at? and then they'll release the money? My dad is trying to explain to the bank but they are just peons going through processes handed down by head office in Toronto. They don't know why they are going anyting...they just do it. It is difficult to get to the person who really CAN answer the questions. The long and the short of this is how can my parents get this money released from the bank? or do they have some claim to it...even though they (the bank) haven't been paying insurance premiums for the last 10 years. M dad is also in contact with the insurance provider as I believe they should be acting on his behalf.