9 responses

  1. Robert Johnson
    April 27, 2012

    I’m trying to refinance my condo with a lender who plans to sell it to Fannie Mae. We’re having problems with the new Fannie Mae guidance that replaces the Walls-in terminology. The lender is requiring a statement on the policy that the insurer will insure “100% replacement cost”. So far, we’ve been to about 5 insurance companies who’s disclosure statement page does not comply with what the lender is asking for. My insurance is currently with Allstate and covers 20% of our Condo’s appraised value but this still isn’t sufficient for the lender. Our condo association’s insurance covers everything but the wall coverings and floors. As it sits now, we’re unable to refinance because of this policy. Could you shed some light on it or do you know of an insurance company that meets the new Fannie Mae requirements?

    • Scott Storace
      April 27, 2012

      Hi Robert – Writing insurance for a condominium policy certainly has changed. Lending requirements continue to change as well. However, not all lenders follow Fannie Mae guidelines. We do not require that your walls-in, or HO-6, policy be 100% of the replacement value. The coverage that you have in place with Allstate at 20% of appraised value meets our minimum requirement.

      It’s also crucial to know some great insurance brokers…which I’m fortunate to have. In this case, though it sounds like the challenge is with the lender and not the insurance. So, your refinance is not dead. I would be happy to look at it with you so you can proceed with your refinance. Let me know if you would like my help. All the best! Scott

      • Scott Storace
        May 7, 2012

        To add a little bit more:

        In PrimeLending’s world, as long as the HO-6 renter’s policy covers betterments and improvements then we can lend on it. This the preferred and most common direction. It’s easy and most cost effective.

        Another (less desirable) tactic is the beef up the insurance for coverage A. Coverage A is replacement value according to rebuilding cost, not loan cost. Lenders are not supposed to be able to require coverage A to match a loan because rebuilding cost is for structure only not land, however if a lender plays hard ball and will not fund unless coverage A is at a certain amount then things get complicated.

        Coverage A can increase a homeowner’s premium by 25 or 50%. This is another reason it’s less desirable.


  2. Mike O’Connell
    October 26, 2012


    Recently had 2 refis fall through because my HOA has no master policy. My home is one of two on the lot and the HOA covers just the 2 units. The individual homeowners carry their own insurance. There are similar properties in the area (2 on a lot) that don’t even have a HOA.

    Do I have any options other than upping HOA dues and having it buy the policy?



    • Scott Storace
      October 30, 2012


      You do have another option. As long as we can show that at least one of the 2 units is owner occupied AND each owner has sufficient insurance coverage then we don’t need a master insurance policy. The insurance will need to cover general liability, hazard insurance for the units and common areas and HO6 insurance to cover the walls-in.

      All the best!

  3. Sami
    August 27, 2013

    How much should one insure the inside of an apartment per sq feet in the event God forbid it is destroyed by fire for example?

    I have read $65 sq ft to $200 sq ft. My insurance broker told me $400 sq ft and I don’t believe her.

    • Scott Storace
      August 27, 2013

      You need to check what the HOA covers. Your coverage may include HO-6 walls in as well. If it does not, then the amount of coverage will vary based on your personal belongings, the size of the unit. YOur HO-6 policy needs to be sufficient to return the unti back to it’s condition prior to the loss. It needs to cover:
      1. Fixtures
      2. Equipment
      3. Replacement of improvements and betterments

      Therefore, that amount will be determind by you and your insurer.


  4. Samatha
    September 3, 2013

    I am trying to refi my condo, but the lender is telling me that my master policy only has $1 million in liaiblity and that they require $3 million because my complex has over 100 units? I cannot find this anywhere on the internet, everything I see for Fannie states $1 million.. can I refi?

    • Scott Storace
      September 3, 2013

      Fannie Mae only requires $1M in liability coverage. The lender must have additional overlays.

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