Forced placed insurance and loan servicing for lender

[Whit Ewen]

I've been a small hard money lender for a few years now, and typically lend on fix and flip SFR deals. Sometimes, the borrower will neglect to renew the insurance at some point triggering a need for forced placed insurance (FPI). I have not been able to find an insurance agent willing to write a policy for us / me. I've called several national and local commercial insurers to no avail (QBE and Seattle Specialty).

I've read through several posts here on the forums about this. It seems from those that it is hard to find an insurer that will do this for an individual lender (or a small company). Is the best strategy to select a loan servicer that offers a service that can place a policy at the moment of lapse? I'm using August REI LLC out of Garland, TX at the moment but they don't appear to offer this, though I'm verifying that. I know Bob Malecki mentioned FCI 2 years ago in this regard (who he said uses OSC for their FP insurance). I'd love to hear of loan servicer recommendations for a small lender like us.

One person in my team seems to think it would be as simple as acquiring a homeowner's policy naming us as mortgagee, but it would help to know the exact reasoning why this would (not) work.