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Home > Industry Resources > Resource Centers
Because commercial/multifamily lending is generally non-recourse, and because the lender's interest in the property (the debt) generally exceeds the borrower's interest (the equity), adequate insurance coverage has always been a critical component in the underwriting and ongoing servicing of commercial/multifamily mortgage loans. Before a commercial/multifamily mortgage loan is closed, lenders require that the borrower provide evidence that compliant insurance coverage is in place and the loan documents require that the borrower provide evidence that the coverage remains in place on each renewal date during the life of the loan.
Since the insurance industry is not able to provide insurance policies in a timely manner, alternate means of evidencing that compliant insurance are necessary.
MBA Recommends
Property and casualty insurance companies be required to provide reliable evidence of insurance that details the coverage in effect on a commercial/multifamily property at the time the property coverage is bound and each year by the renewal date. The evidence of insurance should be delivered to both the borrower/policyholder and the lender's servicing agent. The insurance companies and/or brokers and agents should also be required to notify the borrower/policyholder and the lender's servicing agent when the policy is cancelled or upon any material change in coverage.
If you are interested in learning more, please contact Kathy Marquardt at kmarquardt@mortgagebankers.org
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