Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
The home is the item that is pledged to secure the loan. The mortgage company has an interest in that property until the mortgage has been fully discharged. Their interests are limited to the amount owed. Should the property be destroyed their interest would be served first. If the property is only partially destroyed they would want the house restored to retain its value.
Renwanz Insurance & Financial Solutions, Carlsbad, CA
When a financial institution pays off the previous owner of your house, they have an investment to protect. After all, it was the lender's money that allowed you to "own" your house. As a result of the lender paying on your behalf, there is a conditional pledge of the property to the bank or lender for your obligation to repay the debt.
If something were to happen to the house such as a fire, the value of the house would be significantly impaired and the lender could be left without re-payment of the loan and no house to sell due to the damage. Therefore, the lender is seeking assurance that if there is damage to the house in which he has a financial interest, he can recover his investment.
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If something were to happen to the house such as a fire, the value of the house would be significantly impaired and the lender could be left without re-payment of the loan and no house to sell due to the damage. Therefore, the lender is seeking assurance that if there is damage to the house in which he has a financial interest, he can recover his investment.