Insurance and Awareness

I am now going to recount a problem I encountered as a landlord living far from his rental. This problem could have been avoided if I had been more aware of the e-mails I received from my mortgage company and if i had updated my information with all of those associated with my business.

As a first-time homeowner purchasing my property through the FHA´s 3.5% down payment I was a bit skeptical of listing the home initially as a rental. I mentioned it to various lenders at different companies and they all stated that there would be no penalty if the government or lender found that I no longer lived at my property. I was fairly confident that I would be fine as long as I continued to pay my mortgage. At the same time, I did have an ounce of doubt in this fact so I decided to list my home address with the lender as my rental property´s address. This is what led to a huge problem.

I began receiving messages from my lender about six months after having closed escrow. This company was sending peculiar messages that asked me to check my account inbox with them. When I attempted to login to my account I was told that my account had been frozen. For this reason I began ignoring any and all of their messages. After about three months of this I received a call from my associate informing me that my insurance on the home had been cancelled. The insurance company had sent a letter to my home address, ¨my rental property¨, that stated that my policy had been cancelled because of a fault with the backyard fence. In my opinion, this is a poor reason to discontinue a plan but that is how insurance companies work.

Upon learning this I immediately called my lender and asked them to reset my account so that I could sign-in. After this tedious process I read my messages and found that it had taken my lender a few months to realize that my property was uninsured. But now that they had realized their latest message stated that if I did not purchase a new policy within a month they would purchase one for me. This new policy would not necessarily be the cheapest on the market either. The message was dated almost a month in the past so I knew I had to purchase a new policy soon.

When I purchased the new plan I saw that I had done it the day before my lender had said was the deadline. My new insurance contacted the lender that same day to inform them that a new plan had been purchased. After believing the situation had been settled, I received an e-mail the next day from my lender. Apparently, the lender decided to purchase their own insurance for my property. This meant that they would soon be charging me for this plan, and that I would be paying double the insurance for two plans. I decided to rectify this quickly by calling the lender immediately. They informed me that the plan they purchased would be cancelled, but that I would have to contact the insurance company they paid to get my money back. It seemed the trouble would never end.

After a month I received a check from the other insurance company. As a pleasant surprise I also received a fairly large check from my lender as well, for the money I paid for insurance all those months I didn´t have a plan. It is strange that it ended up working in my benefit, although it was a fairly risk move. As a landlord be sure to stay on top of your mortgage lender´s e-mails. If you become locked out of your online account be sure to reset it immediately. Failing to do so can become catastrophic if an accident were to occur while the property is uninsured.