Posted on: 21st Nov, 2009 07:03 am
i'm closing a refi with aimloan on a 3unit owner occupied in san diego. i cancelled the signing last night (mobile notary) after reading the contract and having questions about the new mortgage holder having the right to make me purchase earthquake and flood insurance. i'm not in a flood zone. for the next 30 years anyone who purchases this mortgage contract can require me to purchase earthquake insurance that could easily cost $1000 a month or more on three units. major insurance companies are leaving the california fire and earthquake market and costs are skyrocketing. the new contract also allows them to buy the hazard policy and charge me if i decline, and all rents are assigned directly to the mortgage holder if i default. is this an "average" 2009 refi contract stipulation on hazard insurance requirements? i'm retired and don't have to refinance and don't know if it's worth the risk.
http://www.mortgagefit.com/postdeal/about31021.html
check there for my answer, ron. please don't post the same query more than once. it's confusing to everyone. thanks.
check there for my answer, ron. please don't post the same query more than once. it's confusing to everyone. thanks.
Update on earthquake insurance:
After the CA 1994 Northridge earthquake most mortgage companies changed the wording on the their hazard insurance section. They lost a court case which attempted to take the proceeds from a mortgage holders private earthquake insurance. The changes now assigns all proceeds of earthquake insurance to the lender to pay the mortgage, if your short you still pay the rest. They do not have to repair the property, this is basically a form of mortgage insurance. Most have a clause that they may require you to carry earthquake insurance. See: M artin vs. World Savings & Loan Association (CA 2001)
This is mortgage insurance
After the CA 1994 Northridge earthquake most mortgage companies changed the wording on the their hazard insurance section. They lost a court case which attempted to take the proceeds from a mortgage holders private earthquake insurance. The changes now assigns all proceeds of earthquake insurance to the lender to pay the mortgage, if your short you still pay the rest. They do not have to repair the property, this is basically a form of mortgage insurance. Most have a clause that they may require you to carry earthquake insurance. See: M artin vs. World Savings & Loan Association (CA 2001)
This is mortgage insurance
