Mortgage Company Holding the Insurance Check: The Roofer’s Side of the Loss Draft

Why the money can arrive in pieces: the Fannie Mae rules as an example

How a servicer releases insurance money depends on who owns the loan and on that investor’s rules. For loans Fannie Mae owns, the rules are public, in Servicing Guide section B-5-01, “Insured Loss Events” (dated July 12, 2023, read on October 17, 2026). They are worth reading once, because they explain why one roof is paid in a single check and another in draws:

• Loan current or less than 31 days delinquent at the time of the loss. The servicer is authorized to release an initial disbursement up to the greatest of $40,000, 33 percent of the insurance loss proceeds, or the amount by which the proceeds exceed what is owed on the loan, and to disburse the rest based on periodic inspections of the repair work. A final inspection is not required.
• Advance payments. If the borrower has already paid the contractor or bought materials, the servicer is authorized to reimburse the borrower from the proceeds as shown by paid receipts, and receipts are not needed when the proceeds are $40,000 or less.
• Loan 31 days or more delinquent. Proceeds of $5,000 or less may go out in one payment. Above $5,000, the initial disbursement is 25 percent of the proceeds, but no more than the greater of $10,000 or the amount by which the proceeds exceed what is owed on the loan, and the rest goes out in increments of no more than 25 percent after inspection of the repairs, with a final inspection required.
• Inspections. For loans that are current or less than 31 days delinquent, the servicer may use photos or video submitted by the borrower, or a video call, to document progress or completion, if the photos show the location, are authentic and unaltered, and confirm the repairs match the adjuster’s itemized estimate and the repair plan.
• Money not yet released sits in an interest-bearing custodial account for the borrower’s benefit.

Two things follow for a roofing office. First, on a Fannie Mae loan that is current, a roof claim under $40,000 can be released in one disbursement, so a draw schedule on that kind of job is a question to ask, not a given. Second, on larger claims and on delinquent loans, the servicer is waiting on evidence of the work, and the photos that answer it are the ones the crew takes anyway. Other investors, FHA, VA and portfolio lenders set their own rules; the servicer’s instructions for the specific loan are what count.

The loss-draft package is a job, so give it an owner

Each servicer publishes its own instructions for its loss draft department, and the list differs by servicer and by loan. Read it once per job, from the servicer, not from memory. The roofing company’s part can include the documents below, and they can be assembled before the servicer asks:

• The signed contract with the scope and price, matching the carrier’s estimate or explaining the difference.
• The company’s W-9 and certificate of insurance, and its license where the state issues one.
• The final invoice, and progress invoices if the job is paid in draws.
• Completion photos with the address visible or otherwise tied to the property, taken the day the crew finishes, plus progress photos on a draw job.
• A signed certificate of completion, and lien waivers in the form the servicer or the state requires, conditional until the money clears.
• The servicer’s own forms, filled in for the contractor’s part, ready for the homeowner to sign and send.

The package gets one owner in the office and a target date counted from contract signing, not from the day cash feels tight. Everything on the list except the final invoice and completion photos can be ready before the first shingle goes on.

A “waiting on servicer” queue in A/R

A/R aging prints a loss-draft check as one overdue number, next to a deductible the homeowner still owes and a depreciation payment the carrier still holds. Those are three different waits with three different next steps, and lumping them together means none of them gets one. Split the receivable into three queues (waiting on the carrier, waiting on the mortgage company, waiting on the homeowner) and give the mortgage-company queue its own columns:

• Servicer name, loan investor if known, and whether the loan was current at the time of the loss.
• Amount on the check, amount released so far, and the date of each release.
• Date the package went to the homeowner and the date the homeowner sent it to the servicer.
• Inspection requested, inspection date, and result.
• Next follow-up date and the person who owns it.

Illustrative example: a company carries $180,000 in A/R. Split, it reads $70,000 waiting on carriers for depreciation, $85,000 at mortgage companies across nine jobs, and $25,000 owed by homeowners. Of the nine loss drafts, four were sent complete and are waiting on inspections, three are missing a lien waiver or a signed servicer form, and two were never sent at all. The last five are office work. The numbers are hypothetical; the company’s own A/R replaces them.

Material bought before the first draw

On a draw job, the roofing company can pay for shingles, underlayment and a dumpster before any money is released. Under the Fannie Mae rules the initial disbursement on a large claim can be a fraction of the total, so the company carries the material cost until the first inspection. That is a cash-flow question to settle before the contract is signed: what the contract says about deposits and draw timing, and what the homeowner has agreed to request from the servicer. Payment terms and lien rights are questions for the company’s construction attorney.

On the office side, the fix is timing. A package sent the week the contract is signed reaches the servicer before the material bill arrives. A package assembled after tear-off arrives after it, and the company finances the job in the meantime.

The line the office does not cross, and when there is nothing to buy

The insurance money belongs to the policyholder and the lender, and the servicer’s relationship is with its borrower. The roofing company’s role is to supply complete, accurate documents for its own work and to follow up on its own receivable. It does not negotiate the claim, interpret the policy or speak for the homeowner: Texas bars a contractor from acting as a public adjuster on its own job, and Florida §489.147 bars interpreting coverage or adjusting a claim without a public adjuster license. Whether a servicer will talk to the contractor at all is the servicer’s rule; plan on the homeowner making the request, with the package ready. Disputes, lien rights and any question about who is owed what go to a construction attorney.

If loss drafts are assembled when the contract is signed, sent the day the roof is done, and followed up on a calendar, this step needs nothing from outside. If A/R cannot say how much is at mortgage companies, on which jobs, or what each one is waiting on, the Revenue Review takes two weeks, read-only: we read the company’s CRM, QuickBooks and job files, split A/R by who each dollar is waiting on, and put a monthly dollar figure on each gap the records support, with a written report and a 90-day plan. We never contact carriers, servicers or homeowners. A free 20-minute call is enough to tell whether it fits.