By: Stephen Smith
Claims involving foreclosures raise special issues both for the property insurer, as well as insureds and lenders. In order to help understand how they work, this is the final part of a three part article which will examine the following issues:
RELEVANT INFORMATION IN CLAIMS INVOLVING FORECLOSURE
While handling a claim involving a foreclosure raises many of the same issues as any property damage claim, there are some areas of inquiry that require extra attention. In addition to the date of loss, there needs to be investigation into the date of the foreclosure, property occupancy, and the nature of the foreclosure transaction.
Information to Request from Mortgagee
Documents to Request from Mortgagee
Investigation of a loss where a foreclosure has occurred requires obtaining documents not normally required in the investigation of conventional claims. Some of the documents to request include:
Reservation of Rights Letter
1. Rights to Reserve if Claimant's Status Remains That of Mortgagee (Loss was Before Foreclosure).
2. Some Rights to Reserve if the Lender/Claimant Is "Insured" (Loss After Foreclosure).
Statements and Examinations Under Oath
In conjunction with the above referenced documentation requests, at a minimum, a recorded statement should be taken from the mortgagor’s representative. If they can be located, the statement of the mortgagee/insured needs to be taken as well.
If difficult questions of law or of fact need to be resolved, then an examination under oath of the same persons may be necessary.
Claim Determination
As noted in the first article, generally this is how it will work:
However, these are general rules and these types of claims are factually intensive.