Forced placed insurance and loan servicing for lender

11 Replies

I've been a small hard money lender for a few years now, and typically lend on fix and flip SFR deals. Sometimes, the borrower will neglect to renew the insurance at some point triggering a need for forced placed insurance (FPI). I have not been able to find an insurance agent willing to write a policy for us / me. I've called several national and local commercial insurers to no avail (QBE and Seattle Specialty).

I've read through several posts here on the forums about this. It seems from those that it is hard to find an insurer that will do this for an individual lender (or a small company). Is the best strategy to select a loan servicer that offers a service that can place a policy at the moment of lapse? I'm using August REI LLC out of Garland, TX at the moment but they don't appear to offer this, though I'm verifying that. I know Bob Malecki mentioned FCI 2 years ago in this regard (who he said uses OSC for their FP insurance). I'd love to hear of loan servicer recommendations for a small lender like us.

One person in my team seems to think it would be as simple as acquiring a homeowner's policy naming us as mortgagee, but it would help to know the exact reasoning why this would (not) work. 

Originally posted by @Whit Ewen :

I'd love to hear of loan servicer recommendations for a small lender like us.

 As I've mentioned before, I do like FCI for performing notes and having the taxes/insurance escrowed makes it almost set and forget.

With that said, why were the insurance companies turning you down?  A popular company for investors is NREIG. They are very easy to deal with, have quick turnaround etc. I try to use the servicers' forced place insurance provider but if not, NREIG can most likely do it. 

@Patrick Desjardins it's not that they're turning us down, it's just that the insurance companies haven't been responsive to us (I've contacted a number of them) and the insurance agencies don't know what to do with us (our need).  The agencies have never heard of our need, so it seems I need an insurance agent specialized in this or to fold into a larger juicier "customer": in other words working with a loan servicer that is big enough to get the attention of an insurance company. I'll certainly see if FCI can help us out.  

Originally posted by @Whit Ewen :

@Patrick Desjardins it's not that they're turning us down, it's just that the insurance companies haven't been responsive to us (I've contacted a number of them) and the insurance agencies don't know what to do with us (our need).  The agencies have never heard of our need, so it seems I need an insurance agent specialized in this or to fold into a larger juicier "customer": in other words working with a loan servicer that is big enough to get the attention of an insurance company. I'll certainly see if FCI can help us out.  

 I can pretty much guarantee you that NREIG or FCI and their forced place provider can solve your problem. Let us know how you do. 

I'd love to hear about any other people's experience with FCI and/or other loan servicers. 

@Linda Hastings - I really appreciate you taking the time to list those out. I've just read through those threads, and they offer a lot of insight. I last searched in July and should have searched again to uncover these latest ones. I'm glad you asked about Madison which wasn't on my radar. 

Originally posted by @Adam Adams :

I have a company that I use and I find them to be great. I'll shoot you a message.

 Hi Adam. I'm in need of a Forced Placed Insurer in California. Can you recommend one for me?

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