That’s a hard one to know the answer on. Logic would say that since you need the funds to repair the property, they SHOULD endorse and return to you. Have the repairs been completed already? If so, providing your lender with a copy of the bill and proof of repairs'completion might help. If repairs haven’t been completed, I’d get a bid on the job to show you do intend to finish the repairs. Lender’s big concern (other than fact you’re behind) is going to be you taking the money and failing to repair the damage to your home. If all else fails, calling your lender wouldn’t be a bad idea either.
Hmmm… Interesting situation, but one situation is not tied to the other. I would assume the insurance check would be handled correctly, with the funds going towards the insurance claim.