Homeowners Insurance & Surrendering a Property
If we surrender our home to the bank, do we still need to keep up our homeowner's insurance?
My husband and I have filed bankruptcy and have sent a letter of intention to the mortgage company indicating we have surrendered our home. We have not lived in the home for 2 months and have not heard from the mortgage company. How long do I need to keep the homeowners insurance on the home?
By
Mark Cappel
- When you are no longer on title it is safe to terminate your policy.
- Keep your policy if you are still in possession of the home.
- Send a letter to your bank notifying them you vacated the home.
I could not find any authoritative court cases upon which to base an answer to your question regarding retaining or terminating homeowners insurance following the quitting of a property and its surrender.
Bankruptcy and Foreclosure
Bills.com offers basic advise on bankruptcy and foreclosure will provides some information on what to expect after a bankruptcy is discharged. See also advise on utility charges after bankruptcy and foreclosure, which you may find beneficial. Bills.com has foreclosure information, which includes a glossary of terms and other FAQs.
Mortgage Payment Default
Though you do not mention defaulting on your mortgage payments, you need to learn more about the consequences of doing so. See the Bills.com resource on defaulting on mortgage payments and the consequences of doing so to learn more.
Recommendation
You mentioned you sent a letter to the bank to put it on notice that you have vacated the property. I suggest you send another letter certified mail to ensure that the bank receives the letter, and more importantly, that you have proof it received your letter.
You do not mention your state of residence or the location of your personal property. If you are renting, then it is advisable to have renter's insurance. However, if you stored your furniture in a storage facility, then from a practical perspective, you may want to retain your homeowners insurance to protect your personal property in case of fire, theft, or water damage while it is in storage.
Conservatively speaking, until the home is sold and you are no longer on title, retaining home insurance provides you coverage if the property is damaged by fire, vandals, or if a potential buyer slips and falls while touring the property. As I mentioned in the first sentence of my answer, I am uncertain if you or the bank has liability after you quit the property, and it is easy to envision scenarios where the homeowner has liability on property he or she has quit because the title of the property is still in the homeowner's name.
I hope this information helps you Find. Learn & Save.
Best,
Bill
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Bryan,Jun, 2010I really liked this article. I just want to appreciate you for this work and I would like to read more on this. -
BABill,May, 2010Is your mortgage company involved in HAFA? Ask. If so, the answer to your question is no. If not, the answer is maybe. A deficiency balance is a negotiable item in a non-HAFA short sale.
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PHPatricia,May, 2010My husband and I have been in our manufactured home for 5 years. We are not behind in payments and have never missed a payment. We have had it listed with a realtor for a year and half. We owe appr. $51,000.00 and it's worth is appr.$25,000.00.My husband has been working 3 days a week for us to make it. He is 72 and I am 69. Our health isn't good and he needs knee replacement surgery,he also has Cardio-Myopathy and can not keep working. We have been talking with our Mortgage Co. and are willing to do a short sale. My question is will we be responsible for balance of mortgage. We live in Las Vegas NV and need HELP. Thank you
