Comment by trollbridge
19 hours ago
If a property is uninsurable, it can be bought for cash. The actual land value can still be mortgaged, too.
Would you want to hold collateral that has a high risk of becoming worthless? You would effectively be self insuring it and would have to price that into a loan you offered.
> Would you want to hold collateral that has a high risk of becoming worthless?
Of course not, the problem is that all parties were a-okay with the purchase in the first place, and the banks are trying to change the terms when they realize their hand is a losing one after many turns of the game. Sometimes that’s life, and the corporations should be forced to lose instead of changing the rules so the homeowner loses instead.
The rules are that you have to maintain casualty insurance in your property in order to keep the mortgage. If you don’t want to do that, the lender will try to obtain insurance on its own and bill you for it.
The bank is actually the loser here. Property becomes uninsurable, they still hold the collateral, and the borrower can simply walk away on a non-recourse state like California.