Expiring Insurance - Contacting Insurance Company and/or Lender After Bankruptcy

[MikeW]

Hi, I haven't posted here in awhile. I'm still waiting out my foreclosure. A Lis Pending was filed over a year ago, then a couple responses from the lender, responding to my attorney's initial Affirmative Defense. That's about it. It could still be a few more months.

For the last two years, my lender has paid the insurance and taxes. I'm getting the feeling that this year, they're not having it anymore - the policy is real expensive. So far, the policy hasn't been renewed and I received a message from the insurance agent wanting to know if the lender sent payment to the insurance co.

At some point soon, I'm going to need to contact the agent. I'm just wondering how that's gone for people. Were you upfront with your insurance agent about the foreclosure and bankruptcy - and were they okay with still insuring you?

I've read that the lender can get a policy on their own in such a case. I wonder if there is a way to find out if they have, without calling the lender. Or maybe I can just call the lender. That would be a bold move. Has anybody done that?

Thanks!
MikeW

[justbroke]

If the lender has "forced placed" insurance, then you would receive a copy of the insurance binder by mail. Most of these lenders are in collusion with or own the insurance company from which the new policy is purchased. The policy will have some ridiculous premium, like $4,000 for one year on a $150,000 house. That forced placed policy will only cover the lender and will only cover loss (or damage) of the dwelling.

[MikeW]

If the lender has "forced placed" insurance, then you would receive a copy of the insurance binder by mail. Most of these lenders are in collusion with or own the insurance company from which the new policy is purchased. The policy will have some ridiculous premium, like $4,000 for one year on a $150,000 house. That forced placed policy will only cover the lender and will only cover loss (or damage) of the dwelling.

Thanks JB. I'll look out for it in the mail. If they did go with the forced plan, it should be on its way. Have you ever heard of the lender simply letting the insurance expire, basically leaving the house uninsured?

[justbroke]

No. Lenders will almost certainly add forced-place insurance immediately when they "know" or have knowledge of a lapse or potential lapse. I'm assuming that this mortgage was discharged in hour bankruptcy. The only loser, should an unfortunate loss of the structure occur (without injury or death), would be the mortgage creditor. These creditors understand this issue and they are well-served by insuring the property and ensuring that there is no lapse in coverage.

Having wrote that, there could be a lapse in coverage in some cases. I'm assuming that you had your insurance escrowed and the lender was paying this directly. In this case, the lender has two choices. That is to pay the "cheaper" policy or to put a forced-placed policy in place. There's no way to tell what they will do. As for you personally, if you are still living in the property, you may want to obtain, should a lender forced-placed policy be put in place, a renters policy to protect your person items and to provide some liability protection.

[MikeW]

Yes, the mortgage was discharged and the insurance was escrowed. So it's a renters policy that I need to look into then. I was wondering about that also. It's kind of an odd, unorthodox category that I fall into. I don't know if there's a specific name for it even, when communicating with insurance companies. I'm sure they, and the lenders, have their own, not so nice names for it though.

[MikeW]

No word on the HO insurance yet, but I did receive the strangest thing in the mail last week. My lender took out a very small life insurance policy on me. The letter included an offer to upgrade the coverage. I would just have to sign and return the form. Needless to say, that didn't happen.

[Pjmax]

MikeW, make sure your home looks like someone lives there. Make this as obvious as possible. Keep the grass trimmed, don't accumulate mail or newspapers, turn some lights on when you are not home after dark. If you can, have some furniture on the front or back porch, etc. Can't say for sure if or when, but it's very likely there will be occupancy inspectors coming by to see if the home is vacant or not, prompted by either the mortgage co., or an insurance co.

[LadyInTheRed]

No word on the HO insurance yet, but I did receive the strangest thing in the mail last week. My lender took out a very small life insurance policy on me. The letter included an offer to upgrade the coverage. I would just have to sign and return the form. Needless to say, that didn't happen.

That is a very common way to sell life insurance. It has nothing to do with the status of your mortgage.

[MikeW]

MikeW, make sure your home looks like someone lives there. Make this as obvious as possible. Keep the grass trimmed, don't accumulate mail or newspapers, turn some lights on when you are not home after dark. If you can, have some furniture on the front or back porch, etc. Can't say for sure if or when, but it's very likely there will be occupancy inspectors coming by to see if the home is vacant or not, prompted by either the mortgage co., or an insurance co.

I've also read comments that they can sneak up and slap a realtor's lock on your door. I'm sure there are plenty of stories out there about them sabotaging things to drive the person away. A perfect way of doing that would be to damage the outside ac unit. Sure it would cost them money to repair, but that would be a sure way to push somebody out of a home in Florida. I'm glad I have this fence. Just in case though, I did put a lock on the gate.

Now I received a thank you letter from the HO insurance company for renewing the policy. So it looks like the lender caved. I wonder if they haggled over price because the premium was insane.

That is a very common way to sell life insurance. It has nothing to do with the status of your mortgage.

Okay. It was probably just a coincidence then. I just thought it was strange showing up right around the time they were also looking at my insurance situation. Maybe that is what put me on their radar.