[Slava]

Originally Posted by onetwo_threefour

Yeah, I do agree with Troutman. I would never advocate any particular policy of insurance to a client and I really don't know why the bank feels it is appropriate. I guess they figure it's a no-lose strategy. If a client happens to yes to a policy, it's not like they pay a commission to the lawyer, and if they don't the lender isn't losing anything since it costs them zero dollars to have the lawyer present the insurance. The thing that p!sses me off is that most of them won't fund without the signed application, waived or not. It adds time to my appointment that I don't get compensated for and theoretically takes time away from a client's questions or my advice to them on other issues. Obviously, the lender couldn't care less whether Joe Lawyer incurs liability for selling insurance. Isn't that the best kind of client, one who insists that you do something that could lead to liability unless you walk a tightrope?

Unfortunately, it's not like we can tell the bank to PFO with this stuff as they just make it a funding condition to get the documents signed. It's kind of like all the FNF lenders where we have to get the client to re-sign virtually every document they've already signed with the broker. It's a colossal waste of time, since the broker should have already submitted the commitment, PAD, confirmation of conditions etc.

Anyway, that's my vent about this.

Thanks for the info about underwriting. It still seems ludicrous to me that the insurance can be charged for without the criteria for insurabilty being satisfied at the outset.

Actually that is basically the exact argument for why a claim could be denied. As in that Marketplace video above when the potential insured signs to say "No" to that list of conditions and pre-existing concerns, where in fact they ought to be answering "Yes", they aren't meeting that criteria for insurability. Its just that no digging is done at that point to verify this. Instead, its done at the time of claim.

Unfortunately this is a very real issue for people. Not only do people share some stories in that video, but I've seen enough in my experience to say that I think people should get their own policies and not have this potential issue. I say that, not as a sales pitch either, because this is something people should be doing regardless of whether you contact me specifically, just as long as you investigate this with someone!