Hi Jean,

This is not only common but also a requirement for every new lender on any type of loan. Reverse mortgage lenders must be added as an additional insured party (along with the borrower) on the homeowner’s insurance policy to protect their financial interest in the home.

This ensures that if the home is damaged, insurance funds cannot be used for other purposes while leaving necessary repairs undone.

How the Process Works

• This applies to both traditional (forward) and reverse mortgages.
• Typically, your loan processor will contact the insurance company (with your permission), provide the anticipated closing date, and request that the policy change take effect on that date.
• The timing can be tricky to coordinate.

Why Timing Matters

• The new lender will not issue funds unless they are properly listed on the insurance policy.
• If the change is made too soon, the current lender may receive a notice of cancellation or modification, which could raise concerns while the old loan is still in place.

Key Considerations

You can ask your lender to wait and process the change on the scheduled closing date. However, keep in mind:

• Your new lender will not close the loan without a valid policy listing them as the mortgagee.
• If the insurance company delays processing the change, it could hold up your loan closing.
• If the timing is too precise, your loan may be ready to close, but the insurance update might not be completed, causing unnecessary delays.