Renewing Insurance on a Short Sale?

[socc11girl]

I started the short sale process on my house a few months ago, and am waiting patiently for an offer to come in. In the meantime, both my flood and homeowners insurance are due by the end of this month. Last month when the statements came in, I asked my attorney about it and he advised that I should save the $$ (almost 6K total) and that if something happened the bank would cover it. I'm now second guessing that, so I did some research on my own. I called my bank (chase) and they said if I do not pay either, then Chase will take out a policy that would be 3-4 times the amount that I am paying now, because there would be no underwriting. And this amount would be escrowed into my monthly payment (currently I pay a lump sum per year).

Has anyone been through a similar situation? I don't want to spend 6K when I am hoping the house will sell in a few months. Additionally, I am still making the monthly payment, but if Chase ends up putting their insurance on then my monthly payment will go up about 1K, which I can't afford. I am thinking the direction that I would take is pay only the flood (I live in Florida). It takes about 2 months for Chase's insurance to kick in, so fingers crossed that I would have an offer by then.

Any thoughts or advice are appreciated!

[llecs]

Hi OP, I moved your post over to here. It's not about Mortgage Loans, but maybe someone in here has been in a similar situation.

I'd pay the insurance. You don't have to pay for the full year though. You'd get a refund for the unused portion, plus you don't know how long the short sale process will take. It might take months. Are you paying the insurer directly? I wasn't clear on that. The payments are averaged out anyway. If you are paying a lump all at once, try negotiating with the insurer to pay monthly.

[socc11girl]

Thank you - that is good advice! So even though because it is a short sale, I would still receive a refund? Example, if the house is sold in December '12, then I would receive Jan '13 - June '13 back? It is in a lump sum directly to the providers, paying by month certainly is an option though and I will check into that. Thank you!

---

llecs wrote:

Hi OP, I moved your post over to here. It's not about Mortgage Loans, but maybe someone in here has been in a similar situation.

I'd pay the insurance. You don't have to pay for the full year though. You'd get a refund for the unused portion, plus you don't know how long the short sale process will take. It might take months. Are you paying the insurer directly? I wasn't clear on that. The payments are averaged out anyway. If you are paying a lump all at once, try negotiating with the insurer to pay monthly.

---

[Wantgdcrd]

We are considering shortselling the house , BOA has paid our taxes and Insurance this year.  My BF owns the home.  Of course we are upside down over 125K.  We are concerned as they will want us to pay several thousands of dollars at closing.  B4 we start we want answers they will not give.  However my sister bought a shortsale and the owner had to put 6000 on the closing table.  Has this been your experience?

[pizzadude]

I wouldn't bet on them refunding any pre~paid insurance premiums to you ~ I suspect there might be a provision that allows them to keep them to offset losses in a short sale situation.      If they do happen to give you the refund that's great, but I just wouldn't count on it. 

[UpmyscoreinFL]

We did not pay ours during our short sale process.  We were in preforeclosure but got the short sale pushed through in the nick of time.  It was BOA.