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| *Loan,banking and credit>>>homeowner insurance |
Mortgage company unreasonable about homeowners insurance requirements.? |
I own a condo, and I asked my mortgage company how much condo insurance I am required to hold as a provision of my mortgage. They stated that I must have enough to pay off the mortgage balance. This is COMPLETELY unreasonable. The condo association has insurance to rebuild the exterior (which was documented at loan closing), and a great deal of the condo value is the land. It would only take about 1/3 of the mortgage balance to fully rebuild the parts of the condo I am responsible for. If I carried that much insurance, the insurance company would never pay it anyway, even in a total loss. Do I have any recourse for negotiating with my mortgage lender to allow me to carry less insurance? -->Adam Many Mortgage companies try this. I have found that when you actually sit down and go over a scenario with them, they sometimes wise up. Tell them that other companies take into acount the coverage of the master policy PLUS the land value. (if the building burns down, the land is still worth the same amount...) Your policy should only cover the replacement cost of the "drywall in" plus and additions or alterations you make. Source(s): 2 years in mtg bus. 5 in insurance. GA, FL, and SC Lic. 912-756-5802 Nope. They give you the money for your mortgage so they hold the strings and have the power to mandate just about anything they want. They take a lot of risk when they hand over hundreds of thousands of dollars for you to buy a house - so they have the right to mandate that coverage. We ALL pay it. Just shop around for different companies to see if you can get a better rate. If you have had any claims you are not going to get good rates and or might get denied coverage by many firms. Good luck. I'm no expert on insurance and maybe someone will come along and give a good answer. However, I would suggest contacting your local insurance commissioners office and see if they have any information that would be helpful. You have done a closing, which means you have also gotten a "Contract" from the mortgage company. Look at the contract and if it specifically states that you must carry insurance in the amount of the mortgage, then you have no recourse unfortunately. However, the mortgage company wants to make sure that their interests are covered. So if you could show what the Condo Associations's policy covers, that might be enough. Generally you are not required to carry insurance covering the cost of the land, but it would vary depending on the Mortgage Company. The only legal recourse you're going to have is the contract you signed at closing. Beyond that, I would recommend getting a copy of the Condo Associations policy with the wording showing what their policy covers and then get a copy of your policy showing that it covers the rest. That might work. I hope this helps! 10+ years in insurance It's not a matter of paying enough to rebuild, it's about paying enough to pay off your mortgage. I am in the same boat, I owe less than 75% of what my home is worth but I am stuck with PMI for the first 5-years of my FHA mortgage. |
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