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Blanket Mortgage Fire Insurance






















  Is Blanket Mortgage Coverage right for your portfolio?
 
A true blanket hazard insurance policy that covers an entire mortgage portfolio has not generally been available to mortgage lenders.
Blanket coverage is now available from Loan Protector!
 
Some background on the subject...
There are two kinds of collateral protection insurance for mortgage loans:
 
a) Force placed hazard insurance coverage where the lender identifies mortgage loans with cancelled or missing hazard insurance and orders coverage on the property from a lender-placed insurer, and
 
b) Blanket mortgage hazard insurance coverage which covers the lender's entire portfolio in case of any hazard loss to property where the borrower has failed to keep insurance in-force.
 
Because of the high limits of insurance involved and the cost of the insurance coverage, lender-placed hazard insurance placed only on those properties found to be lacking borrower-provided hazard insurance is most commonly the case.

Blanket mortgage hazard coverages most often take the form of mortgage impairment coverage, which often assumes the lender is tracking hazard insurance and has a lender-placed program in place to deal with loans discovered to have cancelled or missing insurance. The usual scenario has the mortgage impairment policy covering any "mistakes" or items missed in tracking.

A true blanket hazard policy for mortgage lenders will cover any incidence of hazard loss on a borrower's uninsured property, without requiring the lender to track for the presence of hazard insurance. The lender must pay an annual premium, billed monthly that is based on the total of outstanding loan balances. The blanket coverage extends only to borrower-owned properties. REO properties can be covered under the policy but must be specifically requested and an additional premium per REO property paid.

 
Advantages of the Blanket Coverage:
No tracking of hazard insurance required.
No risk of missing an uninsured property and suffering an uninsured claim.
 
Disadvantages of Blanket Mortgage Coverage:
Premium must be paid by lender and cannot be recovered from borrowers.
Limits of $100,000 to $300,000 per property may not be high enough.
Premiums may increase after a year of high loss activity.
 
Click here for more information.