As a mortgage lender, you eat, breathe and sleep risk. Youve committed to a multi-year loan to a borrower to help pay for a six-figure property. For homeowners, theres an expectation to purchase property insurance to protect against damages, and depending on the borrowers financial situation, mortgage insurance may be required to approve the loan. In the life of the mortgage, several risks can present themselves, including foreclosure or a lapse in apparent insurance. How do you as a lender protect your investment?
What Is Lender Placed Hazard and Flood Protection?
Also known as forced placed or force place insurance, a lender-placed hazard and flood policy provides a way for a lender to immediately protect their property. A foreclosed home or a detected lapse in apparent insurance are emergency situations for which a lender needs immediate coverage. Such a policy offers several valuable coverages for mortgagees:
- General liability coverage for foreclosed properties
- Wind and hail specific to coastal areas
- Flood and earthquake specific to certain areas
- Builders risk properties that are currently being built
- Condominium coverage for a unit in a larger building with other owners and mortgagees
What Else To Consider?
Unlike traditional insurance that covers up to 80% of the replacement cost, a Force Place policy can cover the loan balance or the original cost of the property, which can be significantly less. Protect your investments by finding an insurer who can offer this product for your mortgage business.