Loss Drafts Clause Samples
The Loss Drafts clause outlines the procedures for handling insurance payments (drafts) issued for property damage or loss. Typically, when an insured property suffers damage, the insurance company issues a payment to cover repairs, but this payment may be made jointly to the property owner and the lender or mortgagee. The clause specifies how these funds are to be endorsed, released, or applied—often requiring lender approval before disbursement to ensure repairs are completed. Its core function is to protect the lender’s interest in the property by ensuring insurance proceeds are used appropriately to restore the property or pay down the loan, thereby mitigating the risk of unrepaired collateral.
Loss Drafts o Seller shall provide Purchaser a listing of all loans with a loss draft pending with corresponding file. o Proceeds remaining in a restricted account shall be forwarded to and be supported by a loan level trial balance. Seller is responsible for any interest payable on loss draft funds required by state and/or investor regulations prior to Transfer Date.
Loss Drafts. Seller has provided sufficient data to Purchaser to enable the preparation of the following reports:
1. Listing of all loans having a loss draft pending
2. Loss draft files for each loan which contains for the following information: • Date of loss • Cause of loss • Amount of loss • Amount of insurance proceeds received to date • Amount of insurance proceeds released to customer to date • Number of outstanding claims and total dollar amount of claim dollars held • Information received from contractors or record of conversation with contractors Correspondent from and/or record of conversation with borrowers and insurance companies • Status report on repairs • Inspection reports, if any • Report on receipt of future proceeds, if expected • Record of any special consideration agreed upon with customer prior to transfer • Check payable to Chase Manhattan Mortgage Corporation representing monies in a restricted field for loss drafts with a detailed listing by loan number, showing how the funds are to be applied