Home Insurance in New Jersey>Question Details

Njrsian, Home Buyer in New Jersey

Why does the mortgage company need the condo's insurance disclosure sheet? We are not selling the condo. We gave them an insurance policy for

Asked by Njrsian, New Jersey Mon Apr 9, 2012

new home

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5
They will ask for it periodically to be sure their interest is protected. Usually as the policy renews each year.
All you normally have to do is provide them a copy that shows that the policy is current.
0 votes Thank Flag Link Tue Apr 10, 2012
Because they are loaning you money to buy in that development and want to make sure the complex itself has adequate insurance, has no pending litigation which could affect your HOA dues by way of special assessments (and increase your monthly $$ obligation), to make sure the dues are current for all residents etc. Remember your homeowners policy only covers the interior and all your personal things.
CONDO association policy covers the outside for everything including fire, disaster repairs etc., and the bank wants to make sure their investment is protected.
0 votes Thank Flag Link Tue Apr 10, 2012
I find if I ask people why they need something they will usually tell me straight up. I would ask them why they are asking for it, good luck,

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time.
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Tue Apr 10, 2012
The Mortgage Company wants to make sure their invenstment is safe. Some Condo Associations, during a recession, may not maintain the grounds, collect Association Dues, manage their Capital Funds, or even pay their Insurance. This will have a negitive effect on property values. Be happy the Bank is helping maintain standards in your community
0 votes Thank Flag Link Tue Apr 10, 2012
Your question is a bit confusing, but I'll see if I can help:

There are 2 scanarios that I can think of here: 1 is you are buying a condo in a complex and 2 is that you own a condo in a complex and you are not buying/selling. Either way, the answers are pretty much the same.

Your "homeowners" insurance when living in a condo does NOT cover the building itself. It is more like a renters insurance, where it covers all of the belongings inside of the residence as well as liability in case something you do affects the other condo owners in the complex.

The Condo also maintains an insurance policy. This policy covers the structure of the condo.

If the condo were to burn down, the condo insurance would pay to rebuild the building, and your homeowners insurance would pay to replace all of your belongings.

Your bank may be requesting this for several reasons: 1) they are doing an audit of their files and either found something that they didn't like or they lost that document all together. 2) the building insurance expired and they are requesting an updated copy 3) they never asked for this document to begin with and now they are updating their system or trying to sell your loan to another servicer and need this document in order to sell.

Surely you can understand why it would be important for the bank to know that the building was insured. It is a requirement of the bank for your structure to be insured, and surely it is a requirement under the DCC&Rs and covenants that the HOA/Condo Association maintain this insurance at all times.

Make a copy of the request the bank sent you and forward that copy on to your treasurer or who ever is the contact person for your association and they should take care of it for you.

Hope this helped and good luck!
0 votes Thank Flag Link Tue Apr 10, 2012
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