Bought the house “subject to” over two years ago. On my third L-O tenant-buyer right not, the others flaked. When I bought it, I changed the insurance policy to my main agent’s company, put my LLC on as named insured, kept seller on as additional insured. No problems until lately.
I’ve gotten two letters (not really nasty, just worrying) in the past month from the bank, BOA, stating
“we recently received insurance information referencing the mortgage account. (It) reflects a name that is different from the one we have on file.”
They want me or my agent to fix it and mail a corrected copy to them. I’ve ignored them so far, but should I address this? Property is fully insured and the loan is current. Are banks, strapped as they are, testing the waters to try to call loans the they think may be sub2 deals due, to collect more cash and shore up their bottom lines? If you’ve had this happen, what did you do? Should I change the policy back to the seller as named insured (I have POA) and my company as add’l insured to keep them happy?
what you should have done when you took over the house was to put title into a trust with you as trustee and the sellers as beneficiaries. That being the case, you should have sent the lender a letter from the sellers stating that they put title in trust for asset protection with you as trustee.
If you haven’t put the title into trust i suggest that you do so. As for the insurance, you can have the policy in the name of the trust or just buy a separate policy. Get with the closing attorney that closed the deal for you for further info
I don’t buy the rampant hype from gurus selling (or networked with those who sell) courses on trusts about how awesome trusts are and how people can’t wait to sue you. I don’t like them, and choose to use LLCs. Trusts are a grey area anyway, and are poorly defined by statute in most states. I know, I know, common law, Illinois, jolly old England, blah, blah, blah. I’ve heard of many recent cases where a T-B can’t get financed out of a trust, chain of title is compromised, insurance companies charge more to insure them, other questions are raised with underwriting, etc. No thanks. Call me stubborn, but I’ll stick with the tried and true.
Back to my question, I had my insurance agent put my seller back on along with me as named insureds. If that doesn’t work, I decided that I’ll just let the bank play whatever card they want.