Sue Insurance, Mortgage or both?

I am just if my parents are able to sue their homeowners insurance, mortgage company or both.
They bought a house 4 years ago and about 1 year ago it started going to hell. It needs a new roof, foundation is cracked all the way around and if it's not taken care of it will cave in. Ceilings are ruined from water damage due to roofs, house is pulling away from foundation and the addition is seperating from the house. The basement was wiped out last year from water damage and the insurance company denied the claim. The basement was furnished. When we tore it apart there was so much mold and espestice it was unbelievable. The previous owners covered all of this stuff up and it was no noticable at all. So what's your opinion on the situation? The mortgage company has the house set at 140,000 and it's not even worth half of that in my opinion.
Additional Details
They had it inspected. When they replaced the carpet they noticed the house pulling away from foundation, when they tore apart the basement there were holes in and cracks in the middle of the foundation, which you would not have seen from outside, there was tons of mold and espestice which was also covered by paneling and ceiling. The roof, the morons that sold the house put shingles in the front and on sides but not the back, for curb appeal i assume.
My parents are not negligent nor stupid when it comes to repairs, the problem is the cost and i can pretty much gaurantee the stupid people that sold the house knew about these problems and covered it up to sell the house.

How would this be the fault of the bank or an insurance company?

If anyone is at fault, it is the home inspector who would have done a preliminary assessment and provided a report on all the things you have identified as faulty prior to purchasing the house.

Assuming the inspection was done, of course your parents wouldn't have purchased the home had these things been identified -- so it was an oversight on the inspector's part, so he could be sued for damages.

If an assessment wasn't done, then there really isn't anyone to blame but your parents for entering into a huge investment blindly without any due-diligence assessments performed.

You will have no luck suing either your lender or insurer. How did they cause these problems? The only possible recourse might be the former owner IF you can prove that they deliberately concealed defects.

Did they have the house inspected before they bought it? Not the mortgage company or insurance company's fault if your parents failed to do their due diligence. Buyer beware.

Some things, like a roof are difficult to prove any negligence. If there was no water damage before, then the roof sprang a leak, stuff happens. Roofs need to be replaced approximately every 10 years or unless they suffer wind/hail damage.

If the seller failed to disclose things they were aware of - like the basement regularly floods (which may be very hard to prove), then your parents could sue them for fraud.

neither your insurance or Mortgage has any liability. You could sue but you would lose. You have NO case against them.

You could sue the prior owner is you can PROVE he hid this. Although 4 years may be too late. Contact a lawyer.

First of all, I am sorry to hear about your parent's trouble with their home. I personally have been a victim of a roof caving in, and it is not a pleasant situation. I certainly wish them the best in getting this taken care of.

I would begin by asking if your parents were wise enough to have the house inspected on their own? When you purchase a home, you should never do so without having an inspector thoroughly inspect the home. Most sellers (mortgage companies) offer this as an "optional" part of the buying process, and some will likely encourage you not to spend the extra money to do so. It would have been at your parent's expense of several hundred dollars, and a lot of buyers will simply walk through and assume since the house looks fine, that it is.

This can be a costly mistake. Using an inspector can save a lot of heartache and expense down the road. They know what questions to ask the seller, and they know exactly what to look for that might indicate damage or potential problem areas. Many people do not realize this, but a homeowner is not required to disclose anything that might be a problem unless specifically asked about it. For instance, if the roof leaks and they cover it up by painting the ceiling, they are not under any obligation to disclose this fact unless specifically asked "Does the roof leak?" Covering up problem areas is a common practice, and is part of the reason hiring a good inspector and an experienced real estate agent is a must.

Unless there was a specific "home warranty" made upon closing the home, there is no warranty, and your folks bought the home "as-is", which means there is no recourse for them if things fall apart. They cannot hold the mortgage company or the seller liable, no matter how bad things get. Unfortunately, there is no "lemon law" such as the ones that govern automobile purchases, and at any rate, 4 years later is too late to make a claim even if there were such a law.

One last thing to know is there would be no warranty on the basement flooding or leaking. Due to the nature of basements and the fact that they are built into the ground, no one can guarantee a basement to be completely water-free. There should have been a contingency plan for flooding, such as a sump pump in the basement, and your parents should have been advised that their homeowners insurance does not cover flooding. Only flood insurance purchased in addition to their homeowner's policy would cover such damages.

One final thought, is that while the appraisal on the home may have been $140k 4 years ago, this was when the housing market was excellent and home prices were at a premium. Your parent's home may indeed not appraise for that in today's market, but the sales price is final. Their only chance of making a difference in the amount they pay for the home is to refinance their mortage if their credit is good and they have made their mortgage payments on time and in full every month.

Without knowing details, it would seem that your parent's really don't have any recourse to sue anyone. They would be better off using their money to invest back into the house to repair as much as they can.

Again, I wish your folks the best.

I don't know how realestate sales in California but in Wisconsin the house must be inspected and appraised. These are the people responsible for finding foundation damage. This is their job and the new owner and bank should hold them responsible as well as who ever covered up the damage. Take lots of pics

Their insurance policy is not a maintenance contract. Their mortgage company is a lender, not a maintenance contract.

Roofs don't go bad in three years. Water damage doesn't happen overnight. Foundation damage doesn't happen overnight, either, unless it's an earthquake.

Flood is not covered under a homeowners policy, they need to file the claim under their FLOOD policy.

My opinion is, your parents bought an old house, with a lot of problems. Either they didn't have it inspected, or the inspection was sloppy, OR, they didn't do any of the "maintenance" they should have done - like replacing the roof.

Mortgage companies don't "set" the house price. YOUR PARENTS DID, when they purchased it, at the agreed upon price.

Your parents can hire a lawyer, at $250 an hour, and sue anyone in the world over this house - even you. But I don't think they're going to win.

you would have a better case suing the builders. there are a lot of variables though. if you are first time owners or not? how much damage was caused when you were there? if you caused the damage?

you should def talk to a lawyer about it. with the way that the eco is right now though, you would probably have to walk away from it or repair the house on your own.

They shouldn't sue anyone. Sounds like they neglected the home maintenance. Your problems all sound water related. The foundation pulled away because you are not getting the water away from the foundation. The roof and gutters must have passed inspection when they bought the house. But they need yearly maintenance and upkeep. Your parents have had 4 years to do this. Maybe they need a book on home maintenance.

You can't sue either. Did they get a home inspection? If they didn't, then they took the risk of forgoing one. But, if they did, as any smart consumer would, these issues would have been uncovered there. And, if the home inspection didn't uncover these issues they may have a claim there. But, regardless if they bought it 4 years ago...who's to say the issues even existed then? It could be from their neglect of upkeep (there's not enough information to pass complete judgement)

The insurance company and the mortgage company are not responsible for the upkeep of your parents' investment.

Espestice? Do you mean asbestos?

File a claim with you house insurance company and they will hire engineers to check for a sink hole. The insurance company will pay for this. If the claim is denied than sue your insurance company. The mortgage company has nothing to do with this.

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