Mitigation Tools


Inspecting properties for pre-existing damage before foreclosure can enhance the bank’s ability to collect claims settlements in the event of a loss.


“One of the most effective tools we found for mitigating claims is for the lenders to inspect the property for damages prior to or as soon after foreclosure as possible.”


Raymond Reed, Marsh


By inspecting properties early, the bank can document damage that existed prior to foreclosure. Prior damage should be the responsibility of the borrower’s insurance or the forced-place insurance. If the borrower’s insurance denies the claim based on the exclusion for intentional damage, the insurer is still obligated to pay the lender, as the mortgagee, for the damage. Mortgage impairment coverage could play a role if there was no coverage in place prior to foreclosure.


Copyright © 2012 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


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