Force-placed insurance questions

[newzie52]

What is the name of your state (only U.S. law)? Alabama

We have a condo (second home) and the mortgage had been with Chase until last year, when the servicing was transferred to IBM LBPS. We are completely current, never had a late payment, etc. Last year they tried to force place flood insurance, even sending us a bill, despite the fact that there was more than sufficient flood insurance, with no lapse, ever. (We had even purchased a separate policy on our own, in addition to the condo association's flood policy, as it was pretty cheap.) They cancelled the force placed flood policy when we supplied documentation.

The condo association has a master hazard insurance policy that is more than sufficient to rebuild the units (very low building cost/square ft. here.) We have a personal HO6 policy for contents (extremely expensive, as the condo is in a coastal area subject to hurricanes.) However, the association's insurance on our building is for less than the remaining amount on our loan (though perfectly sufficient to rebuild.)

Having read some disturbing things about LBPS, I am terrified that they will decide the master policy isn't sufficient, or the deductible (over which we have little control) isn't low enough (currently $2500; there are 8 units.)

What can they actually insist upon, as it's a condo association? Chase never had a problem with the coverage, but I understand that LBPS has a relationship with SNIA (Sterling National) which "monitors" borrowers' insurance coverage and often force places insurance.

I know I'm worrying in advance here, but I want to be prepared, and know where to turn and what to do in case they try to force an expensive policy on us that we likely couldn't afford, and that could have serious repercussions. I'd love to refinance but that's not an option, as condo values have crashed in the last few years, and we owe more than what the unit is worth, at least at the moment.

Thanks for any insights you can provide.What is the name of your state (only U.S. law)?

 

[moburkes]

When you signed your mortgage paperwork you agreed to purchase your OWN flood insurance policy. The condo's policy will built the unit, but not likely the cabinets, stove, fridge, your belongings, furniture, clothing, etc. Your HO6 condo policy will not cover those items in the event of a flood. And the condo's master policy (1) has a deductible (2) was never meant to cover inside of your unit.

 

[newzie52]

When you signed your mortgage paperwork you agreed to purchase your OWN flood insurance policy. The condo's policy will built the unit, but not likely the cabinets, stove, fridge, your belongings, furniture, clothing, etc. Your HO6 condo policy will not cover those items in the event of a flood. And the condo's master policy (1) has a deductible (2) was never meant to cover inside of your unit.

Thanks for responding, but we have our own flood policy, in addition to the association's hefty flood policy, and also have a separate HO6 policy for contents/liability. That is not what I asked.

I asked about what - if anything - a loan servicer (that only services our loan, no one else's in the complex) can require with regard to the condo association's hazard/wind policy. While the policy on the duplex building our condo is in is more than sufficient to rebuild, it is less than the amount of our loan; that's why I'm asking. Like I said, I'm worrying in advance here, but want to be prepared, after the awful things I've heard about LBPS and SNIA.

 

[JustAPal00]

You insure to rebuild, not to pay off. The loan amount has nothing to do with the amount of insurance you need unless it was specified in the original documents you signed. I wouldn't be too worried.

 

[moburkes]

You insure to rebuild, not to pay off. The loan amount has nothing to do with the amount of insurance you need unless it was specified in the original documents you signed. I wouldn't be too worried.

Actually, with flood insurance oftentimes you need to insure for the amount to pay off the loan. Crazy.

 

[JustAPal00]

Actually, with flood insurance oftentimes you need to insure for the amount to pay off the loan. Crazy.

Yeah, but they weren't asking about the flood policy.

 

[moburkes]

We have a condo (second home) and the mortgage had been with Chase until last year, when the servicing was transferred to IBM LBPS. We are completely current, never had a late payment, etc. Last year they tried to force place flood insurance, even sending us a bill, despite the fact that there was more than sufficient flood insurance, with no lapse, ever. (We had even purchased a separate policy on our own, in addition to the condo association's flood policy, as it was pretty cheap.) They cancelled the force placed flood policy when we supplied documentation.

I thought that's what they were talking about since they specifically mentioned it here. My bad if they weren't.

 

[Banned_Princess]

Isn't the government the only people who provides flood insurance?

I'm pretty sure thats true, you get a FEMA FLOOD policy, no matter who brokers it.

you can then get excess flood from a private company.

 

[moburkes]

Isn't the government the only people who provides flood insurance?

I'm pretty sure thats true, you get a FEMA FLOOD policy, no matter who brokers it.

you can then get excess flood from a private company.

No. You buy it through private companies but the rates are all the same since the rates are determined by the government. But, yes, excess flood (Over $250k for a 1-family) is not something the government regulates the same way, so those rates can vary by company.

The servicers are also private companies.