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When your mortgage company fails to pay your insurance out of escrow, what can you do?

Posted onMay 14, 2020
What happens if your homeowners insurance on your mortgage has been cancelled for failure to pay the insurance premium? Since your house is mortgaged, many people are required to pay money into escrow held by their mortgage company or bank. Frequently, mortgage companies put force placed insurance in place with a different insurance company because of their own failure to pay your insurance premium out of escrow, and it’s a lot more expensive and provides less coverage.

What can you do?

Answer: Your mortgage company made a big mistake here if the insurance policy was “escrow-billed”. Often, this problem may not surface until a homeowner suffers a loss and attempts to make a claim with his insurance carrier, only to find out that the policy lapsed for failure to receive a payment. The effects in that situation can be devastating, as not only are you dealing with what may be a catastrophic loss of property, you are left with little recourse without an Oklahoma mortgage escrow lawyer. Unfortunately, most mortgage servicers are huge entities, and you will more than likely get bumped around within their system indefinitely if you attempt to handle the problem on your own. Our first piece of advice would be for you to promptly contact a reputable attorney in your area who is well versed in these matters including insurance disputes, and mortgage servicer’s failure to pay insurance out of escrow.

As soon as possible, contact an Oklahoma mortgage escrow lawyer or Tulsa insurance dispute lawyer to assist you. If you’d like to go it alone, you will first need to contact your original insurance carrier and getting a new insurance policy in place, or ask to have your old policy reinstated if possible. If your insurance carrier won’t do this, you may have to pay for the pricier, bare bones coverage that the force-placed hazard insurance policy provides until you can find other true hazard coverage. Once you have new or a reinstated policy in force, send proof of the insurance policy declarations, along with a receipt/proof of payment to your mortgage carrier/bank via certified mail, return receipt requested, and also whatever fax number they provide you for delivering these documents. You will need to request that your mortgage company immediately cancel the force-placed insurance policy, and demand that they reimburse your mortgage account for the difference in the premium payments that they made to put the force-placed policy in force. If there is an increase in your new insurance policy’s premiums due to the cancellation, your mortgage company or bank should be responsible for paying the difference here as well.

Force-placed insurance coverage generally only covers the mortgage holder’s interest in the property, and not any equity you may have in the home, let alone the contents or other property and liability normally covered by standard homeowners insurance. Even worse, a mortgage company / servicer may often derive a financial benefit by failing to pay your insurance out of your escrow account, as they often own all or stock in the force-placed insurance company, and receive a kickback by putting a policy in place.

Wandres Law is well versed in Oklahoma insurance disputes and mortgage company mistakes. Contact us today for a free consultation.

Finding Help For Your Mortgage Escrow Needs

An Oklahoma mortgage escrow lawyer plays a pivotal role in ensuring a smooth and legally sound real estate transaction. Whether you are a homebuyer or a seller, their expertise is invaluable in navigating the complexities of mortgage escrow arrangements. To see what we can do for you, reach out to Wandres Law, PC.

  1. Understanding Legal Documentation: Mortgage escrow lawyers are well-versed in the intricate legal documentation involved in real estate transactions. They can explain complex terms and clauses in contracts, ensuring that you fully understand the implications of the agreement you are entering into. This ensures that you make informed decisions and avoid potential pitfalls.
  2. Due Diligence: One of the lawyer’s primary responsibilities is conducting thorough due diligence on the property in question. They will investigate the property’s title, uncover any existing liens or encumbrances, and ensure that there are no legal issues that could jeopardize the transaction. 
  3. Drafting and Reviewing Contracts: An Oklahoma mortgage escrow lawyer can draft, review, and negotiate contracts to ensure that they accurately reflect your intentions and protect your legal rights. They can also add specific clauses that safeguard your interests, such as contingencies related to property inspections or financing.
  4. Escrow Account Management: Escrow accounts are central to real estate transactions. Mortgage escrow lawyers oversee the establishment and management of these accounts, ensuring that funds are handled correctly. They verify that earnest money deposits, down payments, and closing costs are placed in escrow as required by the contract.
  5. Title Insurance: Title issues can be a significant hurdle in real estate transactions. Mortgage escrow lawyers can help you obtain title insurance policies that protect you against any unforeseen title defects or claims. They review title reports to identify potential problems and work to resolve them before closing.
  6. Resolution of Legal Issues: If any legal issues arise during the transaction, such as disputes over property boundaries or zoning regulations, your lawyer can provide guidance and work to resolve these issues efficiently. Their legal expertise is instrumental in finding viable solutions that protect your interests.
  7. Compliance with Local Laws: Real estate transactions are subject to a plethora of local, state, and federal laws and regulations. Mortgage escrow lawyers ensure that your transaction complies with all relevant laws, which can vary significantly from one location to another. This includes adherence to tax regulations, zoning codes, and environmental laws.
  8. Closing Process Assistance: Your lawyer will guide you through the closing process, ensuring that all necessary documents are properly executed and recorded. They ensure that funds are disbursed correctly, title deeds are transferred, and the transaction is legally completed.
  9. Post-Closing Support: Even after the transaction is completed, a mortgage escrow lawyer can provide ongoing support. They can assist with post-closing issues such as property tax assessments, homeowner association disputes, or any unforeseen legal matters related to the property.

A mortgage escrow lawyer is an indispensable ally when engaging in real estate transactions. Their legal expertise, attention to detail, and commitment to protecting your interests make the process smoother and less fraught with potential legal pitfalls. Whether you are buying or selling property, having a skilled attorney by your side ensures that your rights are safeguarded and that the transaction proceeds as smoothly as possible. Reach out to Wandres Law, PC to see what our Oklahoma mortgage escrow lawyer can do for you.

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