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DJILLB

Bank asking us to cover HOA insurance shortage?

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I’m days away from closing on a condo In Galveston Texas with my bank. Last minute.. they say condo HOA flood/hazard is under insured by 1.3M. Told I have to get some kind of additional GAP insurance for $36K to get the deal done.    3 other units have closed there this year and did not have this issue at all. When I called my insurance agent to see what that would cost us... she said she never heard of such, wouldn’t even know how or if they could write such a policy, and that they hold policies for other residents in the same building and never had this happen.  The HOA said they have never seen this and they all live or own there, both realtors say the same thing. 

The insurance for the HOA just took over in November and did not write the original policy... therefore lacking the cost estimator that Chase wants. Insurance co will have everything the bank wants in November. 

I asked if some kind of exception can be made until the HOA renews it’s policy in November. Was told no. I have no idea what to do. Asked for them to share their statistics/data/calculations used to come up with 1.3M shortage.... crickets. 

 

Any ideas on how to resolve this? 

 

Thank you you for your time. 

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1 hour ago, DJILLB said:

Any ideas on how to resolve this? 

 

Yeah, find another lender or cancel the purchase under your financing contingency and walk away with your earnest money.

 

If the lender wants you to buy flood/hazard insurance that costs you $36K you buy flood/hazard insurance for $36K or you don't get the loan. It's that simple. Once those people get something into their heads, no matter how wrong it is, there's no talking them out of it.

 

It doesn't make sense to me. At the most your lender should require an amount of insurance that would cover the loan amount if your unit got destroyed. Shouldn't matter how much the rest of the property is insurance.

 

Instead of an HO-6, see if the lender will accept an HO-3 that would include dwelling coverage for the amount of your loan. It's a bit of a finagle but that all I can think of, other than walking away from that lender.

 

 

 

 

 

 

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It has been a 3 ring circus with a place that rhymes with base. <.<    Been customers for years.. two personal accounts, biz account and a car loan.  *shrugs*. TY for your thoughts. Seller is not wanting to wait on us to get a different lender. 

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9 hours ago, DJILLB said:

 Been customers for years.. two personal accounts, biz account and a car loan.

 

Doesn't matter. The mortgage department that lends you money is a million miles away from the department that takes your money and pays you a pittance.

 

Some bureaucratic moron has got it into his/her head that you have to pay $36,000 to buy insurance in order to get your loan. I have no idea how you fight that.

 

9 hours ago, DJILLB said:

Seller is not wanting to wait on us to get a different lender. 

 

Your financing contingency should allow you to cancel the purchase and the seller can put the property back on the market.

 

 

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