Defaulting on mortgage payments and entering foreclosure is a devastating experience for homeowners. This unfortunate situation also can create financial hardship for lenders, who risk a loss of credit when their properties undergo a lapse in insurance. Having a lender placed insurance coverage policy in place prevents this from happening.
Lender placed insurance, sometimes called forced place insurance, avoids some of the many legal complications that go along with foreclosure. Here are some of the other benefits of this type of policy:
- Foreclosures eligible for lower rates
- Available to investors or lenders
- Multiple properties covered under same policy
- Policy usually maintained until cancellation
- Prorated for time period coverage is necessary
Besides standard home insurance, more specialized policies are available from some insurance providers. Depending on the state where you live, these coverages can include the following:
- Builders risk
- General liability
Lender placed insurance is available for more than just single-family homes. It is regularly applied to condominiums, apartments, and commercial properties. If you have leased the foreclosed residence to others, insurance can protect you from loss of rental income.
Foreclosures can be a lucrative source of real estate and mortgage capital. Don’t let lapses in insurance interfere with your business; instead, protect your investment with lender placed insurance coverage for foreclosed properties.