Simple facts Lenders should know about REO & Lender Placed Insurance
Posted by Jennifer Nausin on Thu, May 20, 2010 @ 04:07 PM
More guest bloggers... Hooray!
Mike Flaherty, Vice President - Marketing, highlights for us details that can help Lenders better protect their REO properties.
1. If a property is vacant for more than 30 days, most policies suspend Vandalism and Malicious Mischief. Make sure your policy adds this coverage back in.
2. Any material change in ownership allows the insurance company to cancel a policy. If the property becomes a Real Estate Owned, and you are using the borrower's homeowner's policy, make sure the insurance carrier is aware of the change of ownership and occupancy.
3. Actual Cash Value means replacement cost minus depreciation.
4. There are 3 common forms of Fire Insurance policies that may apply to residential or commercial properties: Basic Form, Broad Form, and Special Form. Usually forced order policies provide Special Form on residential and Basic Form on commercial. The perils insured are broader on Special Form and Broad Form. These cover all the Basic Perils plus Water Damage, Collapse, Weight of ice and snow, Falling Objects, Volcanic action, and Sprinkler Leakage.
5. If a property is vacant, it is important you maintain operating heat in the building or drain the pipes and shut off the water. Otherwise, if pipes freeze and cause a Water Damage loss under Broad or Special Form, the claim may be denied. Basic Perils doesn't cover Water Damage.
6. If you have obtained a foreclosed property, make sure you get a property inspection or a property condition report, make sure this is done prior to the placement of the policy.
7. Obtain a loss payee endorsement. This extends a lender's rights in regards to claims.
Do you want to reach out to Mike to discuss details about the items above? Find him on Twitter @MikeFla and LinkedIn