What Makes a Property Non-Warrantable Due to Fire Insurance?
When a property is "not warrantable" due to fire insurance, it means that it doesn't meet the requirements of Fannie Mae or Freddie Mac for them to purchase the mortgage loan. This usually happens because of issues with the property's insurance coverage, specifically related to fire insurance. Here's a breakdown of what that means and why it matters: What Makes a Property Non-Warrantable Due to Fire Insurance? - Insufficient Coverage: The property may not have enough fire insurance coverage to meet the lender's requirements. This could be because the building is underinsured overall, or because there are specific gaps in the coverage. - High Deductibles: If the HOA or master policy has a very high deductible for fire damage, it could make it difficult to obtain financing. Lenders want to ensure that potential losses are adequately covered. - Excluded Risks: The fire insurance policy may exclude certain types of fire damage or events that lenders ...