Compliments of
Alan Van Zee
President | NMLS #: 297154
Hawaii Mortgage Company, Inc.
Company NMLS #: 232582
Alan Van Zee is one of the top producing Mortgage Originators in the state, originating over $2,000,000,000 to date. He has written and published this weekly newsletter for the past 17 years. It is the most widely read mortgage publication in Hawaii.
Hawaii Mortgage Company, now in our 25th year of providing mortgages to the people of Hawaii, is proud to have a complaint-free history. We make sure our clients are happy!
Mortgage Market News and Insight
For the Weekend of April 26th, 2025
Hawaii’s Most Read Mortgage Publication for 17 Years
Volume 17 – Issue 32
Insurance Claims & Mortgages
Being in the mortgage industry for almost 30 years doesn’t mean I can’t learn something new every day. If you’ve been a regular subscriber to my newsletter you read about the damage my personal residence suffered during the storm in January. I’ve never had to file an insurance claim for structure damage, and it has been an eye opener. Today I’ll share with you the process, the positives, and negatives. It is the same steps those on Maui are going through with their insurance claims. Let’s hope you never have to file a claim. But if you do, you’ll now know how the process works.
If you missed my newsletters regarding my home, during the January 28th storm, a large portion of my 119 year old, 70+ foot tall Kiawe tree came down. I was lucky that no one was hurt, and that (so I thought) my “cottage” didn’t get too damaged.
Pre-Claim:
I am fortunate that I have excellent insurance through a company called PURE. The incident happened at 5:00 in the afternoon. I called my local agent at 6:30 pm. I was assigned a claims agent immediately, and she called me at 10:00 am the next day. I sent her a few pictures and she said, “do what you need to make sure no further damage occurs”. I had to hire tree people immediately to get the tree removed from the roof and also hire a roofer to make temporary patches to areas where the tree penetrated the roof and damaged tiles. Once the situation was stabilized, the real claims work began.
Assessing the Damage:
The insurance company hired an engineer to come evaluate the structure. Having several thousand pounds of wood drop on top of a building could cause unseen issues. I have to say, that engineer was very thorough. The report he produced was done in a week. That report was to be used by not only the insurance adjuster, but the contractor I would choose to do the work.
The insurance company also enlists an insurance adjuster to assess the damage and determine the amount of the claim. Many of the large carriers have their own in-house adjusters. PURE hired an independent adjuster. You may have also seen commercials on local TV for a company that is an independent adjuster to represent you. Depending on your insurance carrier and the “aggressiveness” of their adjuster, this may not be a bad idea. Sadly, many insurance companies try to nickel and dime the claim in an effort to “reduce fraud and waste” but in the end, they are masking their true goal of paying out as little as possible. That’s where an independent adjuster will fight for you.
I didn’t experience any of that, and I believe it was due to two factors. One, the insurance company hired an independent adjuster from the start. When meeting with the adjuster personally, I got the impression that his goal was to determine the true cost of the loss, and not find ways to save the insurer a couple of bucks. Second, the company I am insured with has a stellar reputation for customer service. Something to think about when choosing an insurance carrier.
Filing the Claim:
The insurance company used the adjuster’s report as a basis for the loss figure. They shared the report with my contractor. The back and forth was minimal, as the adjuster’s report was very detailed and encompassed everything that needed to get fixed. Once a number was agreed upon, my contractor submitted their contract for the work.
There were other bills to be paid as well. The tree removal and landscape repair. The tree left holes up to 18 inches deep in certain areas of the yard and also damaged the irrigation. All those bills were submitted too.
Getting Paid:
The claims were approved and within a very short period of time, I got whopping check in the mail. Here’s something you probably didn’t know – I sure didn’t. Every insurance company has different procedures, but if the claim reaches a certain threshold, the check is made out to the homeowner and their mortgage holder. After almost 30 years of requesting insurance binders for clients with the lender listed as the “loss payee” I never connected the dots. Your mortgage holder has a vested interest making sure the collateral they hold – your home, is returned to the shape it was in before the loss.
When the insurance check is also made to your mortgage company, you must contact your mortgage servicing department and ask them about their procedures for releasing funds. Evey lender also has their own procedures for releasing money.
In my case, my mortgage is held by one of our local banks. I had to endorse the check and drop it off at one of their branches. The check was deposited into an interest-bearing special escrow account tied to my mortgage. The bank is not going to sign over the check and let you do what you want with the funds!
As work is completed, a request is made to the bank to release funds. Those funds are moved from the escrow account into my personal account. From there I pay the contractor. Because my repair is extensive, the bank sends someone out to make sure the work was completed before releasing additional funds.
The Maui Fire Claims:
Every home on Maui that was destroyed or damaged by the fire that had insurance went through the same process. The insurance companies promptly paid those claims. Those checks were issued to the homeowner and their mortgage company.
What makes it so difficult for those on Maui, is that 18 months later, most still can’t rebuild. The lender is sitting with those funds in an escrow account. The homeowner is still required to make their mortgage payments. Sadly, many have used the insurance proceeds to pay off their mortgage debt – a way to eliminate that monthly payment. They are now sitting with a vacant lot free and clear of any mortgage, but with no fiscal means to rebuild either.
Insurance vs. Mortgagor:
You may wonder how this can happen. People had insurance, suffered a loss, and now are homeless. Your insurance policy is a contract between you and your insurance company. If you suffer a loss, they are obligated to pay you for that loss as stipulated in the schedule of coverages you had. Once they pay that claim, they are off the hook.
Your mortgage provider is listed on your insurance policy because they have a vested interest in the collateral they loaned upon. For them, they insist your insurance is sufficient to cover any loss. If you have a loss and decide to use those funds to pay off the mortgage lender, that’s your right. Once the mortgage is paid off, the lender has no say in what you do with the property.
And now the week’s economic news…….
Mixed Housing Data
Political headlines again caused volatility for mortgage markets this week but had little lasting impact. The economic data also had just a minor impact, and mortgage rates ended the week slightly lower.
In March, sales of existing homes fell 6% from February, weaker than the consensus forecast, to the slowest pace for March since 2009. The median existing-home price of $403,700 was up 3% from last year at this time and at a record high for March. Inventories remain stuck at historically low levels, standing at just a 4.0-month supply nationally, far below the 6-month supply typical in a balanced market. However, inventories were 20% higher than a year ago.
Sales of new homes displayed better performance in March, rising 7% from February, exceeding the consensus forecast. The median new-home price of $403,600 was down 8% from last year at this time. The supply of new homes stands at the highest level since 2007.
The latest home building data fell well short of expectations. Overall housing starts in March declined 11% from February, and single-family starts sank 14% to the lowest level since July 2024. Single-family building permits, a leading indicator of future construction, dropped just a bit from February. A separate survey of home builder sentiment on housing market conditions from the NAHB unexpectedly increased. However, builders continued to report that uncertainty about tariffs and rising costs were significant areas of concern.
Rate volatility and economic uncertainty took a toll on mortgage applications this week, according to the Mortgage Bankers Association (MBA). Applications to refinance dropped 20% from last week but still were 43% higher than one year ago. Purchase applications fell 7% from the prior week and were up a little from last year at this time.
Next Week
Investors will continue to look for additional information about tariff policies. For economic reports, gross domestic product (GDP), the broadest measure of economic activity, and Core PCE inflation will be released on Wednesday. The ISM national manufacturing sector index will come out on Thursday. The key Employment report will be released on Friday, and these figures on the number of jobs, the unemployment rate, and wage inflation are always closely watched.
Until next week….
*** Please note that Freddie Mac publishes their weekly rate report on Wednesday mornings from data received Monday and Tuesday.
The graph above is intended to shown rate trends, and not “today’s current rate”. ***
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