Lender wants to be a loss payee on the home insurance policy

[Kumar Gaurav]

Hello

I am in the process of refinancing my loan and lender indicated that they need to see their name as loss payee on the home insurance policy document before the loan closes. Firstly,How is this possible while I am still with my old lender?Secondly is this normal as I did not come across this condition during my first loan. Appreciare your inputs.

Thanks

[Steve Morris]

I'd ask your insurance agent.  I think the lender just wants to preserve the equity and value of the property in case something happens and they need to lien/foreclose.