When a borrower allows a mortgage-secured property to go uninsured, even for a brief period of time, the lender is at great risk of large charge-off. If a fire or windstorm or other disaster strikes, it’s highly unlikely the borrower will be able to pay out of pocket to repair/replace the real estate property and the borrower will likely default on his mortgage payments.

As a result, lender-placed hazard and flood insurance can be the key to add protection to a property when the borrower’s insurance coverage has lapsed. Learn more about the many benefits and protections lender-placed hazard and flood insurance can provide.

Features of Hazard and Flood Insurance

Lender-placed hazard and flood insurance can cover residential/commercial properties and mobile homes whenever the borrower fails to insure the property. Our mortagehazard.com system makes it easy for the lender to place hazard and flood insurance on mortgage properties.

This insurance will pay claims on a replacement cost basis for residential properties. For commercial properties, hazard and flood insurance will pay an actual cash value (ACV) settlement.

Liability coverage can be added per property at a competitive rate, for the lender’s foreclosed properties (Real Estate Owned/REO properties).

Some of the benefits of hazard and flood insurance include the ability to insure specific, individual properties (rather than an entire portfolio) and the ability to charge the premium cost to the borrower—which minimizes the lender’s expense. If the borrower defaults on these insurance payments, they can be converted to a money judgment when the property is foreclosed.

Features of Blanket Mortgage Hazard Insurance

Blanket mortgage hazard insurance covers the entire mortgage loan portfolio, and can be used when the lender does not want to track the insurance status on each individual mortgage property. Like lender-placed hazard insurance, blanket mortgage hazard insurance provides all-risk residential and commercial property coverage on a full portfolio.

Many lenders use the blanket mortgage hazard insurance to cover their second mortgages, home equity loans, and home equity lines of credit. This blanket insurance eliminates the need for any follow-up of insurance status after the loan has closed. Eliminating the need to track insurance creates a great savings of time and money for the lender.

In addition, blanket mortgage hazard insurance pays a claim if there is an uninsured loss to the property, without the requirement to foreclose on the property.

What is force-placed insurance?

If the property owner’s insurance lapses for any reason, damages sustained during this period may not be covered – and just a few uninsured property losses can adversely affect profitability of lender’s loan portfolio.

What are types of forced-placed insurance available?

Force place policies may be written on variety of property risks. Commonly lenders will place insurance on both uninsured residential and commercial properties. Foreclosed properties, whether residential or commercial, will also need force-placed insurance.