Subject to insurance question

[Andy M.]

I've been doing sub to deals for a while but I have never run into this problem quite like this before. The first mortgage lender (Ocwen) is asking for evidence of insurance and my agent supplied it but the borrowers are listed as additional insured not the insured. Ocwen is not recognizing the policy that I have in place because the borrowers are not the primary insured. Because they are no longer the owners on the deed they can't technically be the insured (according to my insurance agent) due to something called "insurable interest". As of right now Ocwen is forcing me to buy their lender placed insurance policy at a premium of $1000/year because they won't recognize my insurance because the borrowers aren't the primary insured.

I have encounters this problem before and other lenders have been okay with the borrowers being just an additional insured. anyone else ever encountered this problem before? It's getting a little frustrating.

[Joel Owens]

Andy insurance has been a big pain in the butt on these types of deals for me.

What I have found is these options.

1.Add as an additional insured - Usually this is fine for the first year then upon renewal insurance company says you can't be on policy or have the seller financed you has to be primary.

So adding me as secondary when I hold title or me having a policy but they are secondary who financed me but has the senior loan is the problem.

2.You can get an additional policy which cost money as you mentioned above in addition to the seller who financed you's policy they have. Downside to this is the high cost of double policies.

3.I haven't done this option but have had attorneys that do a bunch of wraps and subject to's do it this way.You have an agreement with the closing that says any proceeds from a claim on the insurance of the property are paid out to you the buyer that is buying subject to or the wrap.

They make it so hard on us with this insurance crap.