Storms in The Box - No MI! Revisited!!
As I thought about this all weekend, it became more puzzling to me.
- Homeowners insurance protects the homeowner from loss to fire, wind, rain, etc.
- A rider also name the lender as an additional insured.
real estate practitioners in Florida or any
Does not mortgage insurance protect the lender against loss from default?
So why wouldn't the MI underwrite while storms are "in the box"?
Is there any greater risk of default if a major storm destroys a home? Is the lender already not covered by the homeowners policy?
Most experienced real estate practitioners in Florida or any state bordering on the Gulf of Mexico or Atlantic are familiar with "The Box". It refers to an imaginary box or area that insurance companies define. Whenever a tropical storm enters this "box" they halt all underwriting of homeowners insurance. Most of us caution buyers that during the storm season they should obtain homeowners insurance a couple of weeks before closing since their lender will not close without it.
Well we learned this week that also applies to Mortgage Insurance or "MI"!
The tough question is how do you prepare for this? Since most "clear to closes" are running up to just a few days before closing date, it is hard to predict or prepare.