Court OKs Stiffing Of Lender On Fire Loss Claim; Servicer's Failure To Notify Insurer Of Commencement Of Foreclosure Action Voids Coverage
Back in March, Tennessee & Arkansas attorney Toney Brasuell, with the law firm of Wilson & Associates, P.L.L.C. reported at Housing Wire that a Tennessee appeals court ruled that an insurance company properly rejected a fire loss claim submitted by a mortgage lender when the servicer failed to notify the insurer of the commencement of foreclosure proceedings on a home that subsequently caught fire and was destroyed.
Reportedly, the decision is currently on appeal to the Tennessee Supreme Court.
For more, see Insurers, Lenders Fight Over Foreclosure’s Policy Impact.
For the court decision, see U.S. Bank v. Tennessee Farmers Mutual Insurance Company (Tenn. App. Ct.; Case No. W2006-02536-COA-R3-CV - December 21, 2007).
For another post where a foreclosing lender was left holding the bag on a home in foreclosure that went up in smoke, see Judge Jams Foreclosing Lender's Improper Grab For Excess Insurance Cash On Fire-Destroyed Home.
For other stories on fires & foreclosures, go here, go here, go here, and go here. foreclosure arson whale
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