So many times we run across homeowners that think that by not paying their mortgage they will somehow help themselves or their case. The logic I guess is that somehow you will have more leverage over the bank to re-finance or many people just think that they are teaching the bank a lesson or showing the insurance company how they have nothing to lose. If you think this way, you are WRONG. Lets first start by reminding you that mortgage companies and insurance companies don’t talk. Everyone assumes that when you file a sinkhole claim your insurance company is immediately going to strike up a conversation with your bank about how to take care of the mortgage or how to fix the house. They do not. Have you ever tried to get a human from your mortgage company on the phone? Exactly. You think your insurance company wants to go through that. Most of the time your mortgage company has no idea you even filed a claim unless you tell them. So while you think my mortgage company is going to step in and put pressure on the insurance company or will step up and decrease my mortgage to help me out, you are wrong. Your mortgage company, especially the big ones, could care less about your claim and are not going to do anything to help you.
So now lets talk about why being behind on your mortgage hurts your lawsuit. Crafty insurance company lawyers will monitor the clerks to see if your home goes into foreclosure. Once that happens, or if it already has, the insurance company knows you have a limited amount of time to get your case resolved. The crazy legal system today is that you can have a foreclosure resolved before a sinkhole lawsuit. So the carrier sit and wait and delay on purpose knowing that one of two things will happen 1) you lose the house and maybe your rights to any money or 2) you get desperate and take a lowball offer to settle. Now if you actually do get to trial the problem you face is, if the defense lawyer is crafty enough to get it into evidence, the jury may know you stopped paying your mortgage years ago. That tells them that you don’t care about the house so why should they? Why should they give you money to fix a house you don’t even want?
Finally, for those sinkhole claimants that think they just want money for themselves out of a settlement, you will destroy your chances of that happening. If the insurance company knows you are behind, they are going to be extra cautious about not angering the mortgage company, i.e. they will almost always put the mortgage company on the check if there is a settlement. Guess what, all your settlement money now just goes right back to your bank and are left with nothing but years of wasted litigation and a crappy credit score. It absolutely does no good for you so if you can keep paying your mortgage, do it!