Why Don't Mortgage Companies Check for the Right Insurance During the Loan?

[NCAgent]

I have a client who just finished a refinance on his home. He listed that he got rent each month from tenants in there and it was listed as an investment property.

He asked me to review his insurance and he has an HO3 on there from a company that is about 4 years old. He moved out of the home about 1 year ago. The refinance was done 2 months ago.

I know insurance is required for a mortgage refinance and purchase. But shouldn't it have been caught somewhere that there was a wrong policy on the home? Either through the loan officer or the underwriter? They check for RC being correct and requiring wind/hail or flood depending on the area, so why can't they check if a policy is a DP or HO policy depending on the home?

Am I missing something? I'm going to start working for another mortgage company and I don't know what kind of fuss to make about these things. I know there is a difference between insurance and just paperwork to close the home but it's really a shame if the client doesn't get a home covered during a loss because they had the wrong type and everyone else was okay with that.

 

[Guest]

did YOU know the differences in policies, wording, etc before you became an agent?

 

[CaptiveGuy]

The mortgage company does not care, all they want to see is the dwelling coverage amount.

I get quotes from some mortgage contacts to do comparisons for their clients and it's amazing what some agents will do to close a deal.

 

[NCAgent]

did YOU know the differences in policies, wording, etc before you became an agent?

I might be reading this wrong, so correct me if I am. But I didn't know the difference between them before becoming an agent. I also wasn't in charge of getting people a new house or lowering their house payments. That seems like a very easy, incidental thing to learn that investment properties get dwelling fire and that primary homes get dwelling fire or HO policies. They have all the information, it takes an extra 20 mins. of learning to know the difference for what they need.

I don't need to know escrows but as an agent I have because it's important since that is how we are paid 99% of the time for homeowners policies. I would figure a loan officer/underwriter would know the difference in these policies.
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The mortgage company does not care, all they want to see is the dwelling coverage amount.

I get quotes from some mortgage contacts to do comparisons for their clients and it's amazing what some agents will do to close a deal.

You would be amazed how many people I encounter that have an HO4 for their primary-owned condo...

 

[Guest]

I will rephrase then.......

Be an expert and what your an expert at, they know mortgages, you know insurance.

Its probaly illegal for them to discuss coverages, etc. Just like its illegal for them to tell us how much to insure a property for.

 

[BTFuzz]

Mortgage co's are the single biggest PITA's to an insurance agent IMO. All they care about is you getting them a binder in the insured's name with the correct mortgagee clause on it and the dwelling amount being at least enough to cover the loan....and they always want it yesterday!

 

[NCAgent]

So just to clarify:

Dwelling = RC of the home or loan
Mortgagee = mortgage company
Insured property = property on the loan

F*ck everything else according to them? Seriously?

What a shame, though I guess it gives me all the more reason to review all investment property mortgages though, huh?