Any suggestions for how to provide proof of insurance to the 1st lien lender, while also having a policy for the sub2 or wrap loan borrower?
the insurance company normally sends the proof of insurance at your request.
“Yes”. However, after the proof of insurance is sent to the 1st lien lender; the house will be sold with a sub2 or wrap mortgage. How will insurance be written for the 2nd lien holder without triggering the due on sale clause on the 1st?
First of all service the transaction through an Escrow or Title company. A servicing account costs about $8.00 per month and they will recieve monies and pay out to Lenders, Insurance company and pay property Taxes on behalf of the original owners.
Secondly have the second buyer added to the original owners insurance policy. Because everything is serviced in the original owners name the lenders have no idea a second transaction took place.
Think “Additional Insured”
Most lenders today won’t call a loan due even if they suspect there has been a sale. They are more interested in getting timely payment than causing problems. Just make sure the payments are paid on time and you should be fine in just going ahead and getting the insurance above board without trying to be sneaky.
donrock
Thank you, that is a big help!