Mtg Co Requiring Insurance Well Before Close of Escrow in CA

[KPIA]

Wondering if anyone has developed a good way of dealing with this.

I imagine this isn't just a California problem but we are starting to see a resurgence of mortgage copanies requiring an Evidence of Insurance well before escrow even closes. Saw it 2-3 years ago when there was a lot of buyers buying the bank owned properties and you had multiple potential buyers involved and the bank was, presumedly, trying to make sure the money losing offer they were gonna take wouldn't fall through after they had dismissed the other buyer(s).

Yes, they have no insurable interest and I would talk to them until I was blue in the face but they wouldn't budge. Soooo, our primary carrier let us flat-can if the deal fell through. Then it went away, like they realized how stupid it was, but now we have seen a few more cases in recent weeks, two of them on NON-bank owned properties.

If we use a different carrier (usually for underwriting reasons) that has minimum earned premiums and won't flat-can, obviously that is a problem. For those we have taken to requiring the policy be paid for by the applicant, disclosing all of the potential pitfalls of the deal falls through. In two cases, we lost the business to local captives who will write anything that comes across their desk (hence the underwriting isn't an issue for them) whose carrier will flat-can.

Anyone here devised an effective strategy for these situations?

 

[DiegoInsGuy]

I have been in this bind before as well. It has never been a problem to FLAT cancel where the insured recieves there entire premium back. I just make sure my UW is in the loop and gives the OK beforehand.

I don't like double work, but when it comes to having to re-write it, I just hand that part over to the CSR's and they take care of it from there.

 

[djs]

I get these requests all the time now. Loan brokers want to send in the evidence of insurance with the loan package to the underwriter, where it can sit for a month.

If you have binding authority, use a reasonable future effective date, then try to stay on top of it. I try not to actually submit the policy until loan underwriting has been approved. Even from there, it usually takes 3 days for the title to transfer.

I might end up off a day or 2, can't be avoided sometimes, but that has never come back to haunt me as much as trying to flat cancel a bunch of policies because something fell through or the entire deal was delayed by 15-30 days (which is very common).

The loan person needs 2 things:
- To know the property can be insured. Not a slam dunk today, especially with foreclosure properties.
- To know the premium for the loan paperwork.

They don't actually need the insurance placed just yet, but they ask for it anyway, but only because that is what the processor has been told to ask for.

Dan

 

[TeePee]

I find out closing date and issue policy and send info to mortgage company. In 15 yrs, I have had to flat cancel less than a handful and had to cancel/rewrite with new closing date less than that.

 

[Soaringagent]

Anyone else have tips or stories?

 

[jhuang]

I don't have bind authority because I'm with Superior Access, but my EOIs will have in the remarks, not bound until all conditions are met.

 

[Soaringagent]

I don't have bind authority because I'm with Superior Access, but my EOIs will have in the remarks, not bound until all conditions are met.

Is that what SAIS write's in the EOI?

 

[Sales71]

Usally they need it 5-7 days before close of escrow. I had to cancel flat a policy recently when they could not disclose th loan.