The Ins and Outs of Quicken Loans Mortgage Clauses

As you embark on the process of buying a house, youâll need to complete many tasks before you can close and move into your new home. Likely the most important item on your to-do list will be securing a home loan. A key figure in the home buying process is the mortgagee, but who is the mortgagee and what are their roles and responsibilities?

Letâs look at what the term âmortgageeâ means, what a mortgagee does and how they work with insurance providers.

A mortgage clause is an important provision that helps protect lenders and borrowers when it comes to home loans and insurance policies. Specifically, a Quicken Loans mortgage clause refers to clauses within Quicken Loans mortgages. As one of the largest mortgage lenders in America it’s helpful to understand Quicken Loans’ use of mortgage clauses.

What is a Mortgage Clause?

A mortgage clause is a provision added to a property insurance policy that protects the mortgage lender from major losses on their investment. The mortgage lender is also known as the mortgagee.

The clause states that if the insured property is damaged or destroyed, the insurance company will pay the mortgage lender the amount that is still owed on the mortgage This helps ensure that the lender can recoup their investment even if the homeowner defaults on the mortgage

Common mortgage clauses include:

Standard mortgage clause: Provides basic protection for the lender if there is a covered loss on the property.
Loss payable clause: Requires the insurer to pay the lender first if there is a covered loss before paying the homeowner.
Mortgagee in possession clause: Protects the lender if they have taken possession of the property.

How Quicken Loans Uses Mortgage Clauses

As one of the top mortgage lenders in the US, Quicken Loans utilizes mortgage clauses in its loan documentation to protect itself as the lender.

Some key facts about Quicken Loans and mortgage clauses:

Quicken requires borrowers to have homeowners insurance that includes a mortgage clause. This helps ensure the lender is paid if the home is damaged.
The clauses name Quicken Loans and its successors and assigns as mortgagees. This allows Quicken to potentially transfer the mortgage to another institution.
Quicken’s clauses often include “ISAOA/ATIMA” language, which provides expanded protection.
Borrowers agree to keep the insurance policy with a mortgage clause in place until the mortgage is fully paid off.
Quicken can force-place insurance on a home if the borrowers let their policy lapse, to maintain lender protection.
In the event of damage to a home, the insurance proceeds go first to Quicken Loans to satisfy the outstanding mortgage balance.

Benefits of Mortgage Clauses for Lenders and Borrowers

Mortgage clauses offer important benefits for both lenders like Quicken Loans and borrowers:

For lenders:

Protects their investment in case of property damage
Ensures they can get repaid in the event of a default
Allows them to transfer mortgages freely on the secondary market
Covers their interests during a foreclosure process

For borrowers:

May help release them from a mortgage obligation if the home is completely destroyed
Can simplify the claims process if there is damage to the property
Provides assurance to lenders, potentially resulting in better mortgage terms

The Mortgage Clause Process with Quicken

When you take out a mortgage with Quicken Loans, here is how the mortgage clause fits into the process:

Application: You apply and are approved for a Quicken mortgage. Loan terms are agreed upon.
Homeowners insurance: Quicken requires you to purchase acceptable homeowners insurance that names them as mortgagee.
Closing: As part of the closing documentation, you agree to keep insurance intact with Quicken named until the mortgage is satisfied.
During the mortgage: Quicken keeps tabs on your homeowners policy to ensure compliance with the clause.
Payoff: Once you fully pay off the mortgage, Quicken releases their interest so you can remove or change the mortgage clause.

Things to Keep in Mind About Mortgage Clauses

While mortgage clauses are standard requirements, there are some important things borrowers should keep in mind:

Make sure you understand the terms of the mortgage clause and how it protects the lender.
Review your policy annually to ensure accurate coverage and mortgagee information.
Notify your insurance company and Quicken Loans of any changes, like coverage adjustments or lender transfers.
The lender will get paid first from any insurance claim proceeds before you receive funds.
Violating the terms of the mortgage clause could potentially be considered a default under your loan.

Mortgagees And Insurance Providers

As the mortgage lender, mortgagees work closely with insurance providers to make sure the property remains protected by the appropriate insurance policy or policies. Common types of insurance on a mortgaged property are homeowners insurance and flood insurance.

Mortgagees require that mortgagors purchase a homeowners insurance policy that provides coverage for property damage so the lenderâs investment is protected and they donât lose money. If the property became damaged, the mortgagee could potentially suffer financially. With an insurance policy, both the mortgagee and mortgagor are protected.

A borrower can have a mortgagee clause in their insurance policy stating that if the property is damaged, the insurance company would make payments to the mortgagee. This means the loss would be payable to the lender even though itâs a part of the insurance policy. The clause also protects lenders if the insurance company cancels or voids the insurance policy. Ultimately, the mortgagee clause has many protections for the property, and like a perfected lien, it can also serve to protect the mortgagee.

Hopefully, you now know more than you previously did about the roles and responsibilities of a mortgagee and how theyâre involved with the home loan and mortgage process. As you continue your home buying journey, understanding the different real estate terms you may encounter will make the process a bit easier.

Interested in beginning your search for the home loan that best fits you and your financial needs? online today.

See What You Qualify For

As the lender in a real estate transaction, the mortgagee has many responsibilities. Letâs go more in depth on some of the responsibilities the mortgagee has in a real estate relationship with a mortgagor.

One of the main responsibilities of mortgagees is mortgage origination, which involves issuing a mortgage loan and setting the borrowerâs interest rate. When taking out a mortgage loan, homeowners use their property or real estate as collateral.

Borrowers must also submit financial documentation to the mortgage lender, who then determines whether the borrower is eligible for the type of loan and the loanâs interest rate. Mortgage origination is a subset of loan origination and involves many steps, which include reviewing the borrowerâs application, processing the loan, underwriting the loan and closing on the loan.

A perfected lien is one thatâs filed with a specific filing agent who ensures that interest is secured in an asset binding. Liens are beneficial for the mortgagee because they offer more protection with the loans and the lending contract.

Perfected liens can also help a mortgagee if a property is foreclosed. For example, a perfected lien shows documentation that a creditor can seize the property and sell the house.

Another responsibility that any good mortgagee takes seriously is being ethical and doing right by the borrower, or mortgagor. This includes guiding mortgagors throughout the home buying and mortgage loan approval processes.

Itâs important that lenders make sure home buyers can afford a property so that buyers donât encounter financial problems during the loan approval and in the future. Mortgagees also help home buyers qualify properly by looking at the right factors and being non-discriminatory toward borrowers.

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FAQ

What is the mortgage clause for Rocket Mortgage?

The mortgagee clause ensures that the insurance company pays the lender if the property is damaged and guarantees that they’ll receive their money even when borrowers are responsible for the destruction of the property.

How do I find my mortgagee clause?

During the approval process, the lender will advise that the insurance policy you choose must have the proper mortgagee clause (likely documented in your commitment letter). Once you select your homeowner’s insurance company, you will provide the lender mortgagee clause, including the address of the lender.

What is the mortgagee clause on a home loan?

The mortgagee clause is a provision that protects the lender from financial loss if the mortgaged property is substantially damaged or destroyed. A mortgagee clause protects the lender even if the damage to the property was intentional and would otherwise void the insurance policy.

What is the standard mortgage clause?

A standard mortgage clause (also called a union mortgage clause) is an insurance provision that covers the mortgage lender but not the borrower for a loss involving the mortgaged property. This clause protects the lender in the event that the borrower intentionally damages the property.

What is an example of a mortgagee clause?

For example, if you obtain a mortgage to buy a home or property and that property is then destroyed in a fire, the mortgagee clause would ensure that the loss would be payable to your lender even though it’s part of your insurance policy. What Is a Mortgagee Clause?

What is a mortgagee clause in a property insurance policy?

One of these precautions is a mortgagee clause in the insurance policy taken out on a mortgaged property. The mortgagee clause is a provision added to a property insurance policy that protects the lender (or the investors who actually own the mortgage), also known as the mortgagee, from suffering major losses on their investment.

How does a mortgagee clause work?

A mortgagee clause works by asserting that, in the event of loss or damage to a property, an insurance company will pay the mortgagee – not the borrower (also known as the mortgagor ). In this case, the mortgagee is considered the loss payee.

How do I get a mortgagee clause?

If you’re interested in getting a mortgagee clause, make sure to reach out to a lender so that a mortgagee contract can be added to your current contract. Depending on the lender you choose, you may be required to agree to a mortgagee clause in your contract before you can get approved.

What is a mortgagee clause in a foreclosure?

Mortgagee clauses often come into play with foreclosures. Say a lender seizes a home that’s been severely damaged by the defaulting owners. The clause allows the lender to claim insurance funds to restore the home and sell it. What are the components of a mortgagee clause? Here’s a quick look at a few terms that may appear in the mortgagee clause.

Do you need a mortgagee clause in your insurance policy?

As a home buyer, you might already be familiar with the process of getting a mortgage. As a result of this extensive process, the mortgage lender will often take precautions to ensure that they can avoid too many losses. One of these precautions is a mortgagee clause in the insurance policy taken out on a mortgaged property.