Home Owner's Insurance question...

[IamIrene]

So, last year a rep from my insurance company does a 30 second drive by and determines that my roof is not sound. The insurance company then sends out a "re-roof or lose your insurance" notice.

Here's the thing: our roof is perfectly sound. It is towards the end of it's useful life but we have no leaks, etc. We did have some moss on the roof but in Oregon, that is a rather common situation. We removed all of the moss and still, they demand we re-roof or we lose our insurance on January 25th.

A little background: Our house was IIB that was discharged last August. We are doing the "stay-and-pay" thing until we figure out what to do next. My husband is one of the chronic underemployed and continues his desperate search for gainful employment. Neither of us wants to invest anything further in our house at this point because we might end up walking away...I'm vacillating between attempting to modify and retain the house (which we would like to do but continue to hear horror stories about how impossible it is to actually achieve, but we are in one of those horrid ARM mortgages with Aurora Bank, I wonder if they would even consider working with us considering they really don't have anything to gain) and just stopping payments and holding out for as long as I can before the house is sold on the court house steps.

So, my question: What happens when the home owner does not have insurance on a house that was IIB? Does the bank step in and cover the insurance then charge the home owner to recover their cost?

[dneil]

If you modify your mortgage, you will no longer be protected by the bankruptcy. Be sure you want this house, can afford it etc. before doing any type of home mortgage modification. We are not going to refinance our house due to the fact that a refinance puts us back on the 'hook' for being personally liable. We are not interested in doing this because right now we can not file for Bankruptcy again for years.... and if we are back on the hook and things go bad again (and with this economy they could) we could end up personally liable for the debt. No Thanks

[IamIrene]

After so much time, I can answer my own question, lol. Which is, the servicer or note holder will put a forced placed insurance policy on the house. It's usually 2x's the cost of regular insurance and isn't as good by half.

This did not happen to us. We fought our insurance company all the way down to the ground. We had a roofer come out and do an inspection (who kindly decided not to charge us) and he sent a notice to our insurance that we've got a good 5 - 7 years left and that it is, in fact, perfectly sound. Felt good to have our insurance have to eat their accusations!

And dneil: most excellent advice! We have no plans at the moment to do an actual modification. I would like to retain our ability to walk away if we need to. Thank you for your response!