Mortgagees may require the Borrower to have hazard insurance. If the Mortgagee requires the Borrower to purchase hazard insurance, the Mortgagee must:
- be named as a “Loss Payee” on the hazard insurance policy; and
- escrow sufficient funds for the payment of renewal premium.
When the Mortgagee has required the Borrower to purchase hazard insurance, the Mortgagee must pay renewal premiums through one of the following methods:
- remit the renewal premium when it is due;
- if the Borrower is required to pay the premiums and fails to do so, escrow funds until there are sufficient funds for the payment of the renewal premium; or
- advance the funds to pay the renewal premium.
For FHA policy information see Handbook 4000.1 III.A.1.h.i at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh