Whether you refinance your mortgage or sell the mortgage to another lender, your Ohio insurance company must know as soon as it happens. Otherwise you will have problems.
Note: Most people think that your insurance company will automatically get notified when this happens. NOT TRUE. Often we do not know. So if you work under the assumption that the new lender will tell your insurance company, forget it. You have to tell us.
Here are the two best issues that can affect your homeowners insurance when your mortgage lender changes.
Problem No. 1 – You are currently set on blocked payment and your invoice is being sent to the wrong lender for payment
This can be done in several different ways. You can voluntarily refinance your mortgage with another lender OR the current lender sells the mortgage to another lender (this happens all the time!)
So when the insurance bill is sent to the wrong mortgage company for payment, several things can happen:
2) They can return the check to the insured (I have not seen this happen so often, but it is possible)
3) They can ignore the bill (YIKES!)
Regardless whatever the reason, the clock clicks on when the premium is to be paid, so there will be a delay in it being paid. In the worst case? The insurance is canceled in the event of non-payment. And remember that this is your policy and you will receive copies of all correspondence. This is worth repeating: the homeowner's policy is YOUR policy. Your mortgage lender provides a service to you by paying it, BUT it is still your responsibility to make sure it gets paid. So if you get a cancellation notice, this is a BIG clue that the lender has not paid it and you need to follow up.
SOLUTION: No matter how or why your mortgage information changes, we need to know about it when it does. If you voluntarily refinance, you will receive the new mortgage clause with your loan paper. If you do not find it easy, ask the loan manager. We need that information.
If your mortgage is sold, you will receive a notice from the new lender with the new mortgage clause (and loan number if applicable). We need that information.
And final note – what if your new loan is not subject to a blocked account? It is up to you to notify us, so that we can remove deposit invoicing and change the payment plan so that you are invoiced instead of the mortgage. Again, any delay in getting a bill paid can end up in unpaid cancellation files and that is not good for anyone!
Problem No. 2 – You have an insurance claim for homeowners
If you have a mortgage on your house, damage checks are paid to you as the insured AND the lender, because they have a financial interest in the home.
If the lender changes and we do not know, all damage checks will be issued to YOU and the lender shown on the policy. If it is wrong, this delays the claim process.
An approval (change) must be made to update the mortgagor and the insurance company must cancel the check and issue a new one. Depending on how quickly all this happens, it can take one to two more weeks to get a proper exchange check.
This delay may cause further problems with repairs. And if it's a serious claim, it's usually not much time to waste.
What happens if you pay off a mortgage and have a claim? It would be a similar process. The check would be issued with your name and mortgage. A change that removes the mortgagee would need to be submitted, then the claims department would invalidate the issued checks and issue a new one with only your name. Again, this causes a delay in getting the repairs done and / or the sellers / contractors getting paid for their work.
So let us know when the lender changes or if you pay your mortgage so that information can be updated to prevent future damage problems …..
The lesson here? If your mortgage lender changes, you must notify your insurance company immediately. Whether you refinance with another lender or sell a mortgage to another lender, the result is still the same – a new mortgagee. And if we do not know, it can cause payment problems (even cancellations – yikes!) Or damage problems (double yikes!).
Worried that your homeowners insurance in Ohio will not be there when you need it? Or not sure what you have? Call us at (937) 592-4871 or fill out the form below.