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Credit Scores and Insurance...They did What???

A funny thing happened on the way to the closing table.

I was able to help a mortgage company place a FHA loan where the borrower had a middle credit score of 545. The borrowers did not want to believe (and neither did the mortgage broker) that we were actually approved. That was until they received a mortgage commitment and were cleared to close. Now comes the bad part.

They were buying a single family home in NJ that was 5 years old. Everything in it was new, from the roof to the basement. It even still had 5 years left of the New Home Builders Warranty. They held off on applying for Home Owners Insurance (against my demands) until they were cleared to close. The closing was on August 22 and we were cleared to close on August 15th. This may all seem normal, EXCEPT they were turned down by every insurance carrier that they went to.

I had no idea that almost every insurance carrier will deny an insurance policy base on credit scores that low, regardless of circumstances or past claims.

Fortunately, I have a contact at a National Carrier that does not look at credit scores and I was able to help again to make sure that we closed the file.

Has anyone else heard of such a thing?

My insurance agent only covers NJ, PA, NY, and CT. I get referrals in all the time for all 50 states and need to help place those loans and insurance policies. Can anyone else make a referral to me for those states that would help in this situation?

Or is you need help with this kind of situation, please let me know and I will be glad to help.

Thank you and please let me know as soon as you can.

Larry Bailey

Vice President of Marketing

TruClose Financial Services, LLC

300 Mt. Lebanon Boulevard, Suite 2215

Pittsburgh PA 15234

TF: 888.510.9665 x 86

FX: 609.228.6378

CL: 609.760.7222

EM: lbailey@besstitle.com

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Posted by Larry Bailey on 08/26/2008 07:50 AM

Comments (8)

credit, credit scores, insurance, closing, problems, hosing, single family, new jersey, mortgage, low scores

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8 Comments on Credit Scores and Insurance...They did What???

Larry, I do know that some insurance underwriters base your premium on credit score, which really stinks for good people who have maybe over extended themselves. If you are having trouble paying you bills increasing them won't help. I am glad it worked out for your client!

08/26/2008 08:08 AM

by Kristin Mason (Resource Title Agency)

Wow...Larry....this is good stuff for me to know!! Thanks for posting this to add to my collection of "things every NJ realtor should know"

ps> I like your "Hosing" tag

08/26/2008 08:13 AM

by Janelle Ponte (Burgdorff ERA)

Just goes to show -- cover everything and get things done earlier than later so that if there is a problem you aren't scrambling to fix it. ~ Evelyn

08/26/2008 08:21 AM

by Property Connections Realty Inc.

I didn't know they would deny based on credit scores. I always thought they would get preferred rates with high credit scores.

08/26/2008 08:38 AM

by John Walters (Specialized Real Estate)

Larry,

Everyone looks at credit scores now.

Ann

08/26/2008 08:58 AM

by Ann Hayden~Real Estate Agent Wildwood e-PRO (Prudential Select Properties)

Yes I know the premiums are based on credit scores car to mortgage. Sad you are needled some many ways when you have had a bump in the road. Have a great week.

08/26/2008 08:59 AM

by Lynn911.com ~ Top Dallas Real Estate Agent (Dallas Real Estate ~ Lynn911.com )

It's all about the money. This is just another way for the insurance company to "justify" charging more for the policy or in this case turning down a policy,

08/26/2008 09:03 AM

by Nashville Tennessee Area Real Estate Rhonda Burgess (Realty World Southern Living)

Larry-I had no idea,great info to pass on to our buyers.

Joe

08/26/2008 09:16 AM

by Joseph D. Federico Westwood, MA Real Estate 781-389-8700 (RE/MAX Landmark)