Short answer
Because your lender has a stake in the house. Your policy names the lender under a mortgagee clause, so repair money often goes through your servicer. On Fannie Mae loans, money for belongings or living expenses goes to you right away. If your loan is current or less than 31 days late, the servicer can release the first part of the repair money, up to the greater of $40,000 or a third of the claim, and the rest as repairs are inspected.
What should I do after damage?
- Report the claim to your insurance company and take photos.
- Call your servicer's insurance claims or loss draft department and ask what it needs.
- Get written repair bids and share your repair plan.
- Endorse and send the check as the servicer directs, and keep copies of everything.
How is the repair money released?
On a Fannie Mae loan that's current or less than 31 days late, the servicer can make a first payment, then pay the rest as inspections show the work is moving along. If several payments are needed, it reviews the repair plan and bids. If you paid a contractor or bought materials yourself, it can reimburse you with paid receipts, and receipts aren't needed when the claim is $40,000 or less. Money not yet paid out is held in an interest-bearing account.
What if I'm behind on payments?
If the loan is 31 days or more late, the servicer must also review you for options to catch up. Claims of $5,000 or less can be paid at once; larger ones are paid in smaller steps after inspections. See options if you can't pay your mortgage.
Can a public adjuster be paid from the claim?
Not from the repair money held by the servicer on a Fannie Mae loan, unless Fannie Mae agrees in writing. Plan how you'd pay any adjuster before you sign with one.
Is it the same for FHA, VA or other loans?
Each investor and servicer has its own rules, so ask yours. The homeowners insurance guide covers coverage choices in New Hampshire, including flood.
Sources
Checked November 2, 2026. Rules and dates change, so confirm current details before you rely on them.
General information only, not tax or legal advice. Program availability, eligibility and terms vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.