If property is behind on payments, has been vandelized, can Lender file insurance claim and collect check?

The lender has to protect their investment, which is their loan. The collateral (the building) also needs to be protected. Your loan documents states what your responsibilities are, especially as it relates to how the property is maintained and repayment of the loan. When you get the loan, you also agree to maintain insurance on the property; the lender has the right (and obligation to their investor) to place insurance on the property should yours lapse.

The check for damages goes to them; if the mortgage has not been paid, and you are in default--well, your lender did what they were supposed to to protect their investment. In the event the property goes to foreclosure, they're stuck with a vandalized building that they have to sell to recover their loan and expenses.

The check goes to them; as with any other insurance check, it will go toward making repairs to the property that resulted from the vandalizing. But, to be sure, you can contact the insurance agency that has the policy or make a written request for information from your lender.

The check will be used to repair the damages.

As the lender is the named insured, it doesn't matter what they do with the check, it is their money.

All the other facts (that the property was in the middle of rehab, that the mortgage was in default, and that the owner let the insurance lapse) are inconsequential to the stated insurance policy and the way the money is spent.

Well, that's the whole purpose of mortgage impairment (lenders only) insurance!! It pays the LENDER For the loss in value due to the vandalism!!!

It goes to the lender. They do NOT fix the property, they sell it. When they sell it, it will be at a lower value than it was before the claim. The insurance is meant to pay the difference in value, to the lender.

IF, at the sale, the combination of sale price and insurance payment is MORE than the balance of the loan and the forclosure costs, they will remit the difference to the owner.