She did what?
Seller seems to be doing things as she's told.
Provides required documents, updates after updates.
Cleans up place....heck, moves out so that it will stay clean for prospective buyers.
Keeps utilities on.
And then she does something stupid: she stops paying for home insurance.
Her rationale? No one is living there, so there's no need for insurance.
Say, what?
I almost had a heart attack. Had to explain that if something happens to the property, like a fire, she has no coverage to repair the damage. She's still liable for the loan. And worse, she won't be able to get a buyer in its current condition.
In short sales, the insurance needs to be paid to close the loan. If the bank needs to force-place insurance, this could take up to 90 days and delay the short sale
I don't need this headache.
Bankruptcy Law Network says Lender Force Placed Insurange is BAD! I believe it!
Who pays?
Property owners must maintain their insurance on the property. Otherwise, if the bank discovers there's no policy, the bank can get a special insurance policy for that property to cover its loan. Specialized insurers sell these policies and charge high premiums.
The bank in turn may make the home buyer pay for it. And what home buyer will want to have that expensive force-place insurance if he can get his own less expensive home insurance?
Will a buyer agree?
My co-realtor friend said she had a client who did the same thing and stopped paying insurance. The bank found out, and imposed an $8,000 charge after getting a force-fine insurance.
If the property owner lets that insurance lapse, a force-place insurance is exactly what the bank will do
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