Condo Associations and Mortgagee Clauses for individual owners

[MIGA1626]

We currently insure a master policy for a condo association of 80 units. We often have mortgagee requests from lenders being utilized by the individual owners. Often they will be required to be listed on the master policy in addition to the Ho6 policy. Is this normal practice? The carriers will sometimes add it but lately they have been telling us they can't add the mortgagee. Is this normal? If it is normal not to allow it to be added how do I handle/explain that to the lender. Thank you!

 

[marindependent]

Often they will be required to be listed on the master policy in addition to the Ho6 policy. Is this normal practice?

Just because a mortgage company asks for something does not make it normal practice. [Not that you are stating this.]

I cannot imagine manging an 80 unit condo complex insurance policy with each and every mortgage asking to be changed everytime a loan gets repurchased or sold off. LOL

 

[whatyouwantfinally]

We currently insure a master policy for a condo association of 80 units. We often have mortgagee requests from lenders being utilized by the individual owners. Often they will be required to be listed on the master policy in addition to the Ho6 policy. Is this normal practice? The carriers will sometimes add it but lately they have been telling us they can't add the mortgagee. Is this normal? If it is normal not to allow it to be added how do I handle/explain that to the lender. Thank you!

Tell the lender, firmly, NO. If you really want to play hardball, tell them you'll talk to your insured about finding another lender.

 

[InsCommentary]

I know agents who insure multiple condo associations with, cumulatively, thousands of units. Lenders are constantly selling their unit owner mortgages to other lenders. If the unit owner mortgagees were added to the master policy, the agency would need to significantly expand their staffs just to keep up with the changes and unit sales.

Ask these lenders what insurable interest they have in property insured by the master policy.

Condo Associations and Additional Insureds: Who Belongs on the Policy?

 

[whatyouwantfinally]

I know agents who insure multiple condo associations with, cumulatively, thousands of units. Lenders are constantly selling their unit owner mortgages to other lenders. If the unit owner mortgagees were added to the master policy, the agency would need to significantly expand their staffs just to keep up with the changes and unit sales.

Ask these lenders what insurable interest they have in property insured by the master policy.

Condo Associations and Additional Insureds: Who Belongs on the Policy?

Exactly.

I worked as a loan officer back in the day, I know how it works. Make the underwriter think you're going to get the client to shop other lenders and virtually ANY issue goes away instantly.

 

[MIGA1626]

Thanks guys! I will play hardball with the lender.

 

[marindependent]

Condo Associations and Additional Insureds: Who Belongs on the Policy?

"Doing so might even be interpreted as insurance fraud" I like it.
[Or dislike it, you know what I mean.]

 

[whatyouwantfinally]

"Doing so might even be interpreted as insurance fraud" I like it.
[Or dislike it, you know what I mean.]

That something might be fraud is not a deterrent to mortgage companies, lol.

 

[MIGA1626]

Here is the response from the bank LOL they are getting really offended.


This is not a carrier issue. For example, if I request my mortgagee to be put onto the individual’s condo policy, I would contact the agent, not the Statefarm. Same would apply for the master policy. I would not be reaching out to the carrier. I would reach out to you guys, the agent. This is standard for all condo policies. When a resident refinances or buys a condo, ALL lenders will request for their mortgagee and subject address on the master. This is not a requirement that is exclusive to my company.

 

[marindependent]

ALL lenders will request for their mortgagee and subject address on the master. /QUOTE]

Obviously, not true.