Mortgage W/ Required Homeowners Carrier

[PC_Agent_in_NC]

Anyone heard of this? One of our auto insurance customers came into our office to quote his mobilehome. He is with Foremost and our rate was better, plus he wanted to have everything under one roof. He put me in touch with his lender to set up the escrow.

When I talked to the lender, he said that according to the mortgage contract, our customer HAS to keep his insurance through Foremost for the ENTIRE length of the loan. No changing companies or shopping for him.

I know Vanderbilt sometimes requires their borrowers to go through their carrier/agency (HomeFirst?) for the first three years or so, but has anyone else out there heard of a mortgage company requiring a single insurer like this?

 

[NCAgent]

Anyone heard of this? One of our auto insurance customers came into our office to quote his mobilehome. He is with Foremost and our rate was better, plus he wanted to have everything under one roof. He put me in touch with his lender to set up the escrow.

When I talked to the lender, he said that according to the mortgage contract, our customer HAS to keep his insurance through Foremost for the ENTIRE length of the loan. No changing companies or shopping for him.

I know Vanderbilt sometimes requires their borrowers to go through their carrier/agency (HomeFirst?) for the first three years or so, but has anyone else out there heard of a mortgage company requiring a single insurer like this?

What bank is this? I work IN a mortgage company and I don't have those kinds of problems.

Talk to the loan officer and processor yourself, don't take the client's word for it. Requiring someone to stay with a carrier is a problem, though it could be that he has to pay 12 months of premium up front. If he is like, 6 months into the policy, they might let him stay and then say if he moves he has to pay 12 months of the new carrier for escrow. It happens all the time.

There's reasons why it is BENEFICIAL to stay with a carrier for a year with escrow, mainly convenience. I haven't heard of one requiring it yet, and I don't know if they are allowed to.

Again, get the name of the bank and talk to the LO and processor yourself.

 

[VolAgent]

Vanderbilt is Clayton Homes' in house mortgage company.

I thought it was illegal for the mortgage company to require you use a certain home insurance company?

 

[Guest]

Have them show in the contract where it says that.

I would venture to guess the insurance agent is the same as the mortgage person and doesnt want to lose the business.....

 

[NCAgent]

Vanderbilt is Clayton Homes' in house mortgage company.

I thought it was illegal for the mortgage company to require you use a certain home insurance company?

If it isn't illegal it is at least highly frowned upon. It it illegal here in my state.

I will say that loan officers don't know insurance for ****. I've had some come to me and ask what an HO6 is before when writing a loan on a condo. So it could be that the LP or LO isn't understanding things, or the client isn't understanding what was told to them. I assume that about 40-50% of the real facts are filtered out once it comes from the source to the client and then about 10-20% more when it leaves the client to me.

 

[PC_Agent_in_NC]

The customer had the Loan Servicer @ American IRA Mortgage Servicing call me. He gave me the mortgagee info to change things over. A few minutes later called me back to say that the customer is under contract to insure the house w/ Foremost while he has the loan. He apologized but said the contract is clear. The customer wanted to come with us, but the loan servicer said "nuh-uh".

 

[NCAgent]

The customer had the Loan Servicer @ American IRA Mortgage Servicing call me. He gave me the mortgagee info to change things over. A few minutes later called me back to say that the customer is under contract to insure the house w/ Foremost while he has the loan. He apologized but said the contract is clear. The customer wanted to come with us, but the loan servicer said "nuh-uh".

I'd get a copy of the contract and review it. That seems very weird to me, I haven't seen that before.

There is a LOT of paperwork, which particular item are they referring to? I can talk to some of my loan officer buddies and see what they say.

 

[Guest]

The contract DOES say they MUST have insurance, the contract CANT say which company the insurance is with

 

[VolAgent]

Since this was posted by an NC agent, I assume the insured is in NC. It appears that this is may be illegal. On page 16 under lender requirements it states that the mortgage company may suggest an agent or insurance company, but cannot require you to purchase from that agent or insurer.

http://www.ncdoi.com/_Publications/Consumer Guide to Homeowners Insurance_CHO1.pdf