When borrowers fail to maintain required hazard coverage on their mortgage – regardless of whether it’s in Texas, Arizona or Oregon, lenders may protect their investment by purchasing lender-placed mortgage hazard insurance.
Banks, credit unions, and mortgage servicers that underwrite mortgages or improved real estate loans and may need mortgage hazard coverage – this comes into play when their borrower fails to obtain their own insurance or doesn’t carry the required amount of hazard insurance.
Mortgage hazard coverage generally covers the outstanding balance on real estate loan, as this is the extent of the lender’s exposure.
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Typically, a mortgage requires the borrower to maintain minimum levels of hazard insurance to protect the lender’s interest or collateral in the property.
Occasionally, borrowers don’t obtain coverage or don’t maintain the required amount of coverage. QuieTrack continually monitors your borrower’s compliance to the insurance requirements of the loan to ensure proper coverage. When a borrower fails to maintain the required hazard coverage on a financed property, a lender may protect their collateral by purchasing lender-placed mortgage hazard insurance usually through the insurance tracking company.
Force-placed mortgage hazard insurance generally fills in coverage gaps when property owners don’t carry the minimum required amount of coverage on financed properties. Because this is a highly specialized property insurance, lenders should work closely with a knowledgeable insurance professional when they’re seeking lender-placed mortgage hazard coverage.
Lenders that originate or service mortgages may need insurance tracking and lender-placed mortgage hazard insurance to protect against uninsured collateral losses. This includes lenders who underwrite residential mortgages, investment property loans, commercial property loans, and other types of real estate loans.
Lender-placed mortgage hazard insurance is specifically designed to protect a loan’s collateral. Coverage is typically restricted to a lender’s financial interest in a property and risk exposure.
Force-placed insurance coverage usually covers only the outstanding balance on a real estate loan since this is the extent of the lender’s interest. Any equity that a property owner may have, isn’t normally covered when a lender places this coverage.
Additionally, mortgage hazard coverage does not cover the borrower/property owner’s personal property or liability. However, QuieTrack can track these requirements if needed.
Lender-placed mortgage hazard coverage usually extends to physical perils, such as fire, theft, vandalism, malicious mischief, wind, lightning, and extended coverages. The precise covered perils are determined and detailed in the policy’s terms, conditions, and exclusions.
Lenders are generally able to obtain lender-placed mortgage hazard coverage on the day that a property owner allows their hazard coverage to lapse or otherwise become insufficient. When sufficient coverage has been restored, QuieTrack will cancel the LPI and refund any unearned premiums to the borrower.
The lender may pass on the premium to their borrower because property owners agree to maintain minimum coverage when taking out a loan. The premiums for lender-placed mortgage hazard coverage are expensive, and borrower/property owners will find that most standard fully underwritten hazard insurance is more affordable and provides more coverage.
Mortgage Hazard policies are governed by the state where the lender is domiciled, and not necessarily the location of the real estate that secures the loan. While insurance rate filings correspond to a single state, agencies like QuieTrack are able to assist with lender-placed mortgage hazard coverage in any state and can handle the complexities of insurance across each state.
What companies offer force-placed mortgage hazard coverage?
Lender-placed mortgage hazard coverage isn’t as readily available as standard hazard coverage, and only a few insurance companies underwrite this type of policy. Lenders should work with an insurance agent, like QuieTrack, who has a 50-year track record of success with placing coverage.
To purchase lender-placed mortgage hazard insurance, contact an broker at QuieTrack Insurance Services. We specialize in insurance tracking and lender-placed insurance. We’re able to assist with coverage not only in California but nationwide. With our assistance, you can get the best coverage and service for your financial institution.