"If the borrower [in default] is still living in the home and is making progress toward repayment and the investor is OK with it, we will release the insurance benefits so repairs can begin," says Northagen."If the borrower is severely delinquent, we handle the situation on a case-by-case basis. We try to work with our customers, but ultimately, if the borrower is not cooperating and not returning messages or is no longer living in the home, the servicer may ask to have the insurance proceeds applied to the loan balance. However, this happens in a relatively small number of cases."
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