by bazan707 » Wed Feb 17, 2010 05:30 pm
in a commercial property policy how the mortgage holder interest is affected in a claim situation and what steps must a mortgage holder take to protect its interest in a loan when the client fails to pay the insurance premium
Posted: Thu Feb 18, 2010 09:56 am Post Subject: Interest of mortgage holder
The client is required to pay certain charges under the obligation of his agreement. If he fails to make such payments, the mortgage holder's interest in the property would get adversely affected and on mortgage holder's request the client should produce the payment receipts to himr. There can also be a legal proceeding which could affect client's right in the property. The mortgage holder can then do or pay whatever necessary like payment of taxes, hazard insurance and others to protect his rights to the property.
Posted: Thu Feb 18, 2010 10:45 am Post Subject: Private Mortgage Insurance
In case the client fails to pay insurance premiums, the mortgage holder can approach him for refinancing after taking into account the clients income and credit score. Refinancing can help the client in getting a favorable rate and term and he can also completely do away with Private Mortgage Insurance (PMI).
Posted: Fri Feb 19, 2010 04:06 am Post Subject:
scarlett, I'm sorry, but WHAT?
In case the client fails to pay insurance premiums, the mortgage holder can approach him for refinancing after taking into account the clients income and credit score. Refinancing can help the client in getting a favorable rate and term and he can also completely do away with Private Mortgage Insurance (PMI).
The OP is wondering what steps he can take because his borrower has failed to maintain the insurance on a piece of commercial property. As well, just because you refinance, it doesn't mean the PMI goes away. If you re-fi your loan and still only have a 5% equity stake, you're still going to likely be required to carry PMI.
I have a question for the OP: As part of and included in the contract, was there a requirement to
1) Maintain insurance coverage on the property, and
2) Maintain Commercial Mortgage Insurance (CMI) on the property?
Assuming #1 is "yes," there should have also been language in the contract that allows you to purchase commercial property vendor's single interest insurance without the consent of the borrower. It's the same legal allowance residential and automobile lenders include in their financing contracts; if the borrower doesn't maintain the required insurance on the financed property- the "bank" has the right to force the insurance on the customer and charge him for the premium. Happens all the time in car insurance.
As to #2 above, that really doesn't have anything to do with this unless your borrower is in default. I'm just curious.
InsTeacher 8)
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