Hard Money Lender - Property Insurance

[Yadira Gutierrez]

Hello BT Team!

Does a Hard Money Lender requires homeowners insurance?

Thanks-

Yadira

[Beth Johnson]

@Yadira Gutierrez

Yes most if not all will require you to have hazard insurance policy so that they can get a mortgagee clause/loss payee on it as the lender. The reason is if you rehab and let's say squatters came in and looted it and then set it on fire, the lender can access the claim money as the lender. I'm a private lender who always requires this and we actually had a borrower who took a loan out and within weeks of funding, the very scenario occurred. We were reimbursed by the insurance company within 3 weeks.