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What this task is

This task collects the current homeowners (hazard) insurance policy for an owned property other than the subject property. The policy should show coverage details, effective dates, and the annual or monthly premium for that specific property. For underwriting, this document confirms that the property is adequately insured and provides the premium figure necessary to calculate PITIA (see PITIA) for each owned property that will remain after closing.

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When this task is required

This task is required when the borrower owns an additional property (primary, second home, or investment) other than the subject property, and that owned property is expected to remain post-closing (not pending sale or already sold). Typical use cases include:
  • The borrower will retain a departing residence as a rental or second home.
  • The borrower has a portfolio of investment or REO properties whose housing expenses must be included in underwriting.
  • The underwriter needs to confirm the true cost of ownership, including insurance, rather than relying on estimates.

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Why this task is required

Hazard insurance information is critical because it:
  • Completes the PITIA calculation (Principal, Interest, Taxes, Insurance, and, if applicable, Association dues) for each owned property that will continue after closing (see PITIA).
  • Helps verify that the property is insurable and insured, reducing risk of loss to both borrower and lender.
  • Supports an accurate evaluation of the borrower’s total housing expense across all properties, not just the subject loan.
If the insurance details are missing or inaccurate:
  • The lender may underestimate ongoing obligations, distorting the borrower’s debt-to-income ratio.
  • There may be unaddressed coverage gaps that increase risk related to the borrower’s overall financial stability.

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Documents needed to resolve this task

To satisfy this task, provide:
  • The current homeowners insurance declarations page (or full policy) for the owned property:
    • Showing property address, coverage amounts, policy period, and premium amount.
    • Identifying the insured parties and insurance carrier.
  • If available, billing or escrow statements that confirm the premium amount and payment structure, especially if escrowed with a mortgage.
These documents allow the underwriter to confirm that the property is properly insured and to incorporate the correct insurance expense into the borrower’s housing obligations.