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Originally Posted by Webbsatwinni
We are back to square 1, the insurance quote was for their estimate of 100% replacement cost, the mortgage company has a higher number in mind based on the appraisal.
The search continues, we are looking for an insurance carrier to match the mortgage lender's number or get the lender to agree to the current insurance number.
With the closing approaching fast, the anticipation is building.
Again, thanks to everyone for their great advice!!!!!!!!!!!!!!!!!!!
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Mortgage Companies cannot, I repeat, cannot press upon the buyer of the loan, nor the insurance, that the insurance must be for the value of the loan. It is law and in every state I know where to find it in MA and RI online but not in NH. As long as you have proper insurance for the bldg then they have to accept it. Insurance is for cost to rebuild and or replace, not for market value replacement.
In the event of a loss the mortgage company will be made whole again by a rebuilding of the property, their investment is protected by the insurance policy. every Mortgage company tries to do this because they feel that if they can bully their position in, they are better protected, just another case of mortgage people not knowing insurance policies and how insurance acts. I deal with this every single day Monday through Friday (in the industry).
Case in Point. I purchased my place for well over $100,000, it is a 400sqft building with no foundation. Max to replace this bldg to the same footprint, because i am in an assoc, would be 40k to $60 depending on types of materials and contractors. I placed $100k on the bldg because NH is a policy value state and in the event of a total loss I would receive $100k to do with as I please. The mortgage company tried to say something, cited the rule, did not even have to find it (which I would have if need and and would have been able to tell you where to find it. and they immediately backed off. The insurance company is not going to insure a bldg barley worth $20k as it stands now just because the market demands that it is worth $150k, the mortgage companies know this they just try to get the loan completely covered.