NJ Lenders Owe 'Covenant' In Use Of Insurance Funds
By Bill Wichert (October 22, 2021, 5:25 PM EDT) -- Mortgage lenders must abide by an implied covenant of good faith and fair dealing in evaluating whether to use insurance proceeds to make repairs to damaged property or pay down a debt, a New Jersey state appeals court said on Friday in a published opinion that upended a foreclosure judgment against a couple.
A New Jersey couple argued that $150,000 in flood insurance coverage should go toward repairing their home, which was damaged in Superstorm Sandy in 2012, not toward their mortgage. (AP Photo/Wayne Parry) In finding that lenders owe that implied covenant to borrowers in such cases, a three-judge Appellate Division panel...
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