Escrow and Billing

[doctor]

If a client cancels a HO policy mid-term, will the mortgage company pay the new carrier if they've already paid the old premium?

If not, what is the best way to get the new policy paid?

Thanks in advance for your responses.

 

[djs]

Best bet is to call the mortgage company and ask them for a check. They may send it, may not. Doesn't hurt to ask.

Warn your client that if they do send it, that on the next escrow review, their payment will increase. It just happens that way.

At the same time, your client will get the prorated cancellation refund back from the current carrier (hence the reason the payment increase).

Dan

 

[Soaringagent]

Great question about home insurance

 

[padthaiforlunch]

Best bet is to call the mortgage company and ask them for a check. They may send it, may not. Doesn't hurt to ask.

Warn your client that if they do send it, that on the next escrow review, their payment will increase. It just happens that way.

At the same time, your client will get the prorated cancellation refund back from the current carrier (hence the reason the payment increase).

Dan

So the HO might get two checks in this situation?

 

[djs]

Not sure what you mean.
If the original insurance company was paid, but there is sufficient funds to pay the second bill, the escrow will probably cut the check to the insurance company.

The ORIGINAL insurance company will receive the cancellation and issue a prorated refund, which normally gets sent to the homeowner, not back to escrow.

It is better to have the original policy cancel, put the refund onto the new policy, then if needed, bill escrow for the balance. Can't always do this though.

It can, of course, become a mess.

Dan

 

[padthaiforlunch]

I was confused about the extra escrow charge.

 

[xrac]

When I did this I paid the escrow paid old HO insurance and then got a check back from the insuance company on my unearned premium. I paid the new insurance premium. However, later I had to straighten out escrow because they figure my escrow on double billed insurance.

 

[adamboyce]

They are all different, but most will refund. Like its already been said, advise client to call their company and have a simple discussion.

 

[Insurance1guru]

Guys you are making this more complicated than it is. All of the big mortgage lenders will pay a second check. The smaller mortgage lenders are questonable you just have to call them to see if they will pay the new policy. If they will not then the customer can be set up on a monthly payment and then when they get their refund either they just keep it or doeposit it and apply that amount to the new homeowners policy. As far as the lenders that write a second check....once the customer gets the uneared prorated refund, they deposit it into their personal checking account then apply that amount on the very next mortgage payment. They have to specify the extra money is to be directed to the escrow account otherwise the bank will apply it to the principle.

 

[Guest]

MOST mortgage companies will pay a second bill, but i have found most Credit Unions will not.

ALso, I have noticed a couple banks are now requiring the client to call to give permission to the bank to cut the check....