Being a Note Buyer, we see all sorts of financial problems affect homeowners. We try to work with people but unfortunately, fire, storms, and other disasters happen and don’t care who or when they happen. When damage occurs, you want to be sure that your borrower has homeowner’s insurance on their property to protect them and your loan. This letter is one of the ways to reach out to let the Homeowner know that they need purchase or renew their homeowner’s insurance, and the consequences should they not do so.  We also call and let them know the same information which adds urgency to the insurance being brought current.

Lapses in insurance often occurs on Notes where Escrow was not factored into the monthly payment. Most insurance companies will send out a cancellation letter to let you, as the mortgagor, know that the insurance is going to be cancelled as of a specific date and time, and then if it has been paid they will send you a re-instatement letter to let you know that the insurance has been paid and the property is once again covered.  It is a good idea to keep a record of the policy and expiration dates to have a system to follow up at least once a year.

You can use this as a guideline to write your own and make it work for you. This information should not be considered legal advice. Please seek legal counsel before using any of the information or examples of documents posted on our site. Every state has its own laws, rules and regulations. I hope you find this information helpful. If you are interested in selling a note we might be your buyer. Please feel to contact us and we will make you an offer.

Best of Luck,

John Hernden