Question:
– Hide quoted text — Show quoted text -> I’m having quite a time understanding the whole homeowners insurance > mess. Could someone please offer some advice? > We purchased our condo (primary residence) a month ago. Everything > went smoothly except the homeowners insurance part. We decided to go > with the provider who insures the entire building (3 units), who > actually came in lower than the other 4 companies I looked at with the > exact same policy. The agent said that the other insurance companies > were trying to insure me for much more than was necessary (he still > gave us a quote on their terms, though). > Everything was just fine until about 10 days before closing, when the > insurance agent called us and said that the bank needed us to be > insured for the full amount of the loan. He said that in his 15 years > in the business, he had never heard such craziness. By this point, we > were so close to the closing that I stupidly accepted it, no questions > asked. Stupid stupid stupid. > I’m going to call the bank on Monday and try to figure this out, but I > was hoping to get some advice before I call. Is there any > monkeybusiness going on that in my naive state I have completely > missed? Two things really worry me: 1)1), the fact that our agent > wanted to insure us for LESS than the other companies, and 2), after > 15 years insurance, I would have assumed that he would have seen > EVERYTHING. > ugh. > joseph
Well, your insurer may be correct. He may be experiencing a changing financial climate and escalating risks, claims and defaults. In the end, it is the homeowner who pays. Caveat Emptor. Barron’s: Home-price bubble in peril? By CBS.MarketWatch.com … "As down payments have fallen from a standard 20 percent of purchase prices and mortgages include cash pullouts via refinancing and second mortgages, owner equity has dropped to 55 percent of valuation from 70 percent in the 1980s." … "Seven months ago, in the most recent numbers available, Barron’s notes that the Mortgage Bankers Association said 3.13 percent of all prime mortgages were delinquent, the highest since a 3.26 percent rate in the 1991 recession. " Article available on file at: http://cbs.marketwatch.com/news/ Profits of Property & Casualty Insurers Plunge From $19 Billion to a $738 Million Loss, According to Weiss Ratings; Terrorist Attacks Drive Up Claims By $23.5 Billion PALM BEACH GARDENS, Fla.–(BUSINESS WIRE)–March 25, 2002–The nation’s property and casualty insurers lost $738 million during the first nine months of 2001, compared to a $19 billion profit during the same period in 2000, according to research conducted by Weiss Ratings, Inc., the nation’s leading independent provider of ratings and analyses of financial services companies, mutual funds and stocks. The loss is the industry’s first since Weiss began rating property and casualty insurers in 1993, and is primarily due to two factors. First, the estimated damages from the September 11 attacks caused reported claims to surge $23.5 billion to $171.8 billion through the third quarter of 2001, as compared to $148.3 billion during the same period the prior year. Secondly, the stock market slump caused the industry to suffer a $6.6 billion, or 49 percent, decline in realized capital gains. … http://groups.yahoo.com/group/HADD_sickhomes/message/465 Courts: Entertainer seeks $20 million from insurer, alleging he was sickened by substance after botched repair. By ANN O’NEILL LA TIMES STAFF WRITER April 10 2002 "…In response to the increased litigation, insurance rates have spiked in some states. Insurers in some areas have stopped writing policies or offer only bare-bones ones that don’t cover mold problems. In June, for example, Farmers Insurance Group lost a $32-million lawsuit filed by a Texas family that claimed toxic mold in their home caused severe health problems. The jury found that the insurer failed to pay for needed repairs for a water leak, which allowed mold to grow rampant in the house, making it uninhabitable. In California, Gov. Gray Davis signed the 2001 Toxic Mold Disclosure Act, which went into effect in January. The law requires anyone selling, leasing or transferring property to disclose any potentially dangerous mold problem. "The mold that grew in this case was the poisonous variety, stachybotrys chartarum," Browne said. "This is the most dangerous mold of all. It can cause death in people who are susceptible to respiratory ailments…." http://groups.yahoo.com/group/HADD_sickhomes/message/492 — Duane M. Tilden PEng(BC) Crown Mechanical Consulting
Response:
My name is Eli Brumbaugh, and my family owns and operates MorningStar Insurance in Houston, Texas we have been serving the state of Texas since 1994 for their homeowners and auto insurance needs. We are an independent agency so we go through many different companies all of which are A+ rated that we work with to get you the best price available. We can offer you: Homeowners Insurance with great rates. Auto Insurance at great rates even with teenage drivers. Life Insurance with great rates. Commercial Insurance with grate rates. We are a member of the (BBB) Better Business Bureau Greater Houston. If you would like a free, fast quote call us at 281-870-1800, or fax us at 281-870-1876 If you live in Houston, Texas and would like to come to the office for a quote come on down to 14125 Memorial Dr. Houston, Texas 77079
Response:
I understand that what you are saying is true in some/ a lot of cases. My mortgage is with HSBC (kind of a large financial institution) and my mortgage documents do not address this issue in the way you state. I am allowed to insure my property, less the lot, for what it would cost to replace it. My insurance company is quite large and with professional agents who were able to calculate my replacement cost. They didn’t shoot from the hp either. They did a detailed analysis to arrive at the replacement cost. I’m happy and HSBC is, too. Trip – Hide quoted text — Show quoted text -> DO it for $150K then the day after closing, change it to $140K and get a > refund for the difference in the premium. >I think that if you read your mortgage document carefully, you will >find a section that authorizes your mortgage company to purchase >homeowners’ insurance in your name if you fail to maintain a policy >that meets their requirements. This is generally far more expensive >than just maintaining the demanded insurance in the first place. They >also typically require the mortgage company to be named on the policy >as co-payee on any payouts, meaning that the mortgage company also >gets notified by the insurance company if the coverage changes or is >cancelled. >– > GnuPG public key at http://badtux.org/eric/eric.gpg > BadTux News Links http://badtux.org
Response:
> DO it for $150K then the day after closing, change it to $140K and get a > refund for the difference in the premium.
I think that if you read your mortgage document carefully, you will find a section that authorizes your mortgage company to purchase homeowners’ insurance in your name if you fail to maintain a policy that meets their requirements. This is generally far more expensive than just maintaining the demanded insurance in the first place. They also typically require the mortgage company to be named on the policy as co-payee on any payouts, meaning that the mortgage company also gets notified by the insurance company if the coverage changes or is cancelled. — GnuPG public key at http://badtux.org/eric/eric.gpg BadTux News Links http://badtux.org
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DO it for $150K then the day after closing, change it to $140K and get a refund for the difference in the premium. Trip – Hide quoted text — Show quoted text -> I’ve never heard of a bank giving you a loan for more than you are insured > for, that would not be a smart risk. >Huh? As far as I know, all that’s necessary is that you be insured for >what it takes to re-build the house, and in fact the maximum that >you’ll get from the insurance company in the event that the house >burns down is the amount that it takes to re-build the house — >regardless of the amount of the mortgage or the face value of the >insurance policy. Thus for example I was looking at insurance for a >home with a $150,000 loan, and the insurance agent detirmined that it >would cost $140,000 to rebuild this house — the rest of the cost of >the house was the price of the land the house was sitting upon. If the >bank demanded that the insurance company insure the home with a policy >that had a face value of $150,000, they could do that — but if the >house burned down the next day, all the bank would get would be >$140,000, the amount it would cost to re-build the home. >Looking at the insurance requirements for the FHA loan program, that’s >what you’ll see — that you must carry insurance capable of rebuilding >the home in the event that it is destroyed by fire, flood, or natural >disaster, and that you must rebuild the home within <n> months of this >happening. The cost of rebuilding a new home is going to be less than >the sale price/loan amount on the home, since you’re paying for both >the home and the land — and can subtract the cost of the land from >the equation. >As things go on and inflation causes rebuilding costs to rise, THEN >you might end up insured for the loan amount (as the maximum amount >that the bank can require to be insured, since it is the limit of >their risk), but that’s not where you’ll start at on new construction. >All I can figure is that things might be different for a condo, since >you don’t own the land a condo is on. On the other hand, the exterior >parts of a condo are generally part of the "commons", and are insured >by the condo association. Meaning that if the condo burns down, your >insurance company will only pay the costs of rebuilding the interior of >the home — they will not pay the costs of rebuilding the exterior of >the home. >In short, while the bank can certainly demand that insurance be >written to cover a $150,000 loss even if the replacement value of the >house is $140,000, the insurance company will only pay the replacement >value of the house at most, regardless of the face value of the >insurance. Thus such a requirement is sheer idiocy on the part of the >bank. >– > GnuPG public key at http://badtux.org/eric/eric.gpg > BadTux News Links http://badtux.org
Response:
> I’ve never heard of a bank giving you a loan for more than you are insured > for, that would not be a smart risk.
Huh? As far as I know, all that’s necessary is that you be insured for what it takes to re-build the house, and in fact the maximum that you’ll get from the insurance company in the event that the house burns down is the amount that it takes to re-build the house — regardless of the amount of the mortgage or the face value of the insurance policy. Thus for example I was looking at insurance for a home with a $150,000 loan, and the insurance agent detirmined that it would cost $140,000 to rebuild this house — the rest of the cost of the house was the price of the land the house was sitting upon. If the bank demanded that the insurance company insure the home with a policy that had a face value of $150,000, they could do that — but if the house burned down the next day, all the bank would get would be $140,000, the amount it would cost to re-build the home. Looking at the insurance requirements for the FHA loan program, that’s what you’ll see — that you must carry insurance capable of rebuilding the home in the event that it is destroyed by fire, flood, or natural disaster, and that you must rebuild the home within <n> months of this happening. The cost of rebuilding a new home is going to be less than the sale price/loan amount on the home, since you’re paying for both the home and the land — and can subtract the cost of the land from the equation. As things go on and inflation causes rebuilding costs to rise, THEN you might end up insured for the loan amount (as the maximum amount that the bank can require to be insured, since it is the limit of their risk), but that’s not where you’ll start at on new construction. All I can figure is that things might be different for a condo, since you don’t own the land a condo is on. On the other hand, the exterior parts of a condo are generally part of the "commons", and are insured by the condo association. Meaning that if the condo burns down, your insurance company will only pay the costs of rebuilding the interior of the home — they will not pay the costs of rebuilding the exterior of the home. In short, while the bank can certainly demand that insurance be written to cover a $150,000 loss even if the replacement value of the house is $140,000, the insurance company will only pay the replacement value of the house at most, regardless of the face value of the insurance. Thus such a requirement is sheer idiocy on the part of the bank. — GnuPG public key at http://badtux.org/eric/eric.gpg BadTux News Links http://badtux.org
Response:
your assoication should have insurance on the whole condo, you are only responsible for in replacement insurance on the inside of the condo. Contact your management company. richard : I’m having quite a time understanding the whole homeowners insurance : mess. Could someone please offer some advice? : : We purchased our condo (primary residence) a month ago. Everything : went smoothly except the homeowners insurance part. We decided to go : with the provider who insures the entire building (3 units), who : actually came in lower than the other 4 companies I looked at with the : exact same policy. The agent said that the other insurance companies : were trying to insure me for much more than was necessary (he still : gave us a quote on their terms, though). : : Everything was just fine until about 10 days before closing, when the : insurance agent called us and said that the bank needed us to be : insured for the full amount of the loan. He said that in his 15 years : in the business, he had never heard such craziness. By this point, we : were so close to the closing that I stupidly accepted it, no questions : asked. Stupid stupid stupid. : : I’m going to call the bank on Monday and try to figure this out, but I : was hoping to get some advice before I call. Is there any : monkeybusiness going on that in my naive state I have completely : missed? Two things really worry me: 1)1), the fact that our agent : wanted to insure us for LESS than the other companies, and 2), after : 15 years insurance, I would have assumed that he would have seen : EVERYTHING. : : ugh. : : joseph
Response:
I’ve never heard of a bank giving you a loan for more than you are insured for, that would not be a smart risk. You don’t have to take insurance for the full replacement value if you are willing to accept the risk of loss for the difference, but I can’t see how you are going to get a loan for more than you are insuring for.
– Hide quoted text — Show quoted text -> I’m having quite a time understanding the whole homeowners insurance > mess. Could someone please offer some advice? > We purchased our condo (primary residence) a month ago. Everything > went smoothly except the homeowners insurance part. We decided to go > with the provider who insures the entire building (3 units), who > actually came in lower than the other 4 companies I looked at with the > exact same policy. The agent said that the other insurance companies > were trying to insure me for much more than was necessary (he still > gave us a quote on their terms, though). > Everything was just fine until about 10 days before closing, when the > insurance agent called us and said that the bank needed us to be > insured for the full amount of the loan. He said that in his 15 years > in the business, he had never heard such craziness. By this point, we > were so close to the closing that I stupidly accepted it, no questions > asked. Stupid stupid stupid. > I’m going to call the bank on Monday and try to figure this out, but I > was hoping to get some advice before I call. Is there any > monkeybusiness going on that in my naive state I have completely > missed? Two things really worry me: 1)1), the fact that our agent > wanted to insure us for LESS than the other companies, and 2), after > 15 years insurance, I would have assumed that he would have seen > EVERYTHING. > ugh. > joseph
Response:
I have never owned nor even though about owning a Condo… However … Your home should be insured for its full replacement value… BUT the land you paid for and on which your home sits IS NOT going to burn down…. The structure itself needs to be insured..the land really does not have to be… I think your agent was thinking along those lines…and I agree… Bob Griffiths – Hide quoted text — Show quoted text – > I’m having quite a time understanding the whole homeowners insurance > mess. Could someone please offer some advice? > We purchased our condo (primary residence) a month ago. Everything > went smoothly except the homeowners insurance part. We decided to go > with the provider who insures the entire building (3 units), who > actually came in lower than the other 4 companies I looked at with the > exact same policy. The agent said that the other insurance companies > were trying to insure me for much more than was necessary (he still > gave us a quote on their terms, though). > Everything was just fine until about 10 days before closing, when the > insurance agent called us and said that the bank needed us to be > insured for the full amount of the loan. He said that in his 15 years > in the business, he had never heard such craziness. By this point, we > were so close to the closing that I stupidly accepted it, no questions > asked. Stupid stupid stupid. > I’m going to call the bank on Monday and try to figure this out, but I > was hoping to get some advice before I call. Is there any > monkeybusiness going on that in my naive state I have completely > missed? Two things really worry me: 1)1), the fact that our agent > wanted to insure us for LESS than the other companies, and 2), after > 15 years insurance, I would have assumed that he would have seen > EVERYTHING. > ugh. > joseph
Response:
I’m having quite a time understanding the whole homeowners insurance mess. Could someone please offer some advice? We purchased our condo (primary residence) a month ago. Everything went smoothly except the homeowners insurance part. We decided to go with the provider who insures the entire building (3 units), who actually came in lower than the other 4 companies I looked at with the exact same policy. The agent said that the other insurance companies were trying to insure me for much more than was necessary (he still gave us a quote on their terms, though). Everything was just fine until about 10 days before closing, when the insurance agent called us and said that the bank needed us to be insured for the full amount of the loan. He said that in his 15 years in the business, he had never heard such craziness. By this point, we were so close to the closing that I stupidly accepted it, no questions asked. Stupid stupid stupid. I’m going to call the bank on Monday and try to figure this out, but I was hoping to get some advice before I call. Is there any monkeybusiness going on that in my naive state I have completely missed? Two things really worry me: 1)1), the fact that our agent wanted to insure us for LESS than the other companies, and 2), after 15 years insurance, I would have assumed that he would have seen EVERYTHING. ugh. joseph
Response:
Posted in Mortgage Refinancing | 
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> The short version: I have a house I can no longer make payments on, > can’t sell, and the mortgage company refuses to help. With the idea > that I don’t want to keep the house, what is my best option? > The long version: I have a townhouse that I was renting out to other > people. The townhouse was my first house which I bought via FHA. After > 5 years I moved out and bought a bigger single family home. Unable to > sell it, I began renting it. The first couple were fine, then I got > the tents from hell. A series of 3 separate tents in fact, that cost > me major money to keep the house fixed up. Sure I kept the deposit and > took them to court but people who don’t own anything don’t fear court > judgments. However they will threaten to sue over the littlest of > things. Anyways, so after months of sleepless nights and maxed out > credit cards, I evicted the last group of tents, put the house up for > sale, and vowed to never rent out anything of mine again. > However the house isn’t selling and I’m offering the bear minimum I > can sell it. So I contacted the mortgager Wells Fargo and FHA to > activate some anti-forcloser protection. They are refusing to help. 12 > weeks of phone calls and I’ve been given a deaf ear all the way. I’ve > looked into refinancing but there isn’t anyway to get the payments > down to something I can afford within all my other bills. > So now I’m a few weeks late on a payment and it isn’t looking like > anything is likely to save me. Right now I see 3 things happening. > 1. A buyer on a white horse comes riding up to buy the townhouse > within the next 45 days. Complete fantasy here > 2. I let the bank foreclose on the townhouse. Seems to be the > most likely option but is this worse than a bankruptcy? > 3. I file for bankruptcy. Put as far as I can tell this option > would be only if I wanted to try to keep the townhouse. Which I don’t > So any suggestions on what to do to make this less painful? > Also how bad is foreclose or bankruptcy. I know people that have > gotten credit cards and credit within weeks after completing > bankruptcy. However I’m not to concerned because the only thing I > needed credit cards was ordering online and making repairs to the > townhouse that I’m trying to get rid off. If I can’t get a gold card > for 7 years, I don’t have an issue with that. 
-v. 