What are the title insurance requirements and property usage restrictions?

  • Use of a settlement agent and title insurer that is good standing and licensed in Colorado
  • ALTA Loan Policy 06-17-06
  • Loan title policy typically must include expanded coverage including the following form endorsements: Colorado 100, ALTA 8.1, Colorado 116/ALTA 22, Colorado 115.2/ALTA 5.1, and Colorado 100.29 (or corresponding equivalents for property type; endorsements and requirements may vary by property type and other specifics), and also sometimes one or both of: Colorado 110.8/ALTA 6.2 and Colorado 103.1 (Endorsements required for loans secured by properties that are not single family detached may vary)
  • The title commitment is acceptable to us and the title insurance underwriter provides a verified closing protection letter prior to the closing
  • The title commitment for the title loan policy must remove Standard Printed Exceptions (typically 1-4) and the Gap Exception. If there are rehab funds in the loan, then Standard Printed Exception (4) may be modified to state any lien or right to a lien, for services, labor or material furnished, incurred and imposed after the date of closing.
  • Good Funds Lending, LLC loan must be a first lien on the property (except for property taxes not yet due and payable)
  • The title commitment for the title loan policy must remove any exceptions not acceptable to Good Funds Lending, LLC.
  • Settlement agent must execute and return Good Funds Lending, LLC closing instructions at least 1 full business days prior to closing.
  • Title Insurer must provide and verify an acceptable closing protection letter to Good Funds Lending, LLC at least 1 full business days prior to closing.
  • Settlement Agent must supply acceptable settlement statements to Good Funds Lending, LLC at least 1 full business days prior to closing.

What are the typical hazard insurance requirements (for single family detached)?

  • Borrower must have and maintain hazard insurance policy with Good Funds Lending, LLC as the mortgagee during the entire term of the loan
  • Underwriter has a current AM Best Financial Strength Rating of BBB+ or better, or a current Demotech Financial Strength Rating of A or better
  • Typically for a single family detached house a vacant dwelling policy commonly known as ISO “Special Form” or “DP-3” (without deletions or reductions) and including coverage for vandalism, and malicious mischief (including minimum coverage amounts and deductions do not exceed $5000) or other policy forms which may include endorsements such that policy includes all perils and provides equivalent or increased coverage as a Vacant Dwelling Special Form policy described above.
  • Endorsements must be included such that there are no gaps, exceptions, nor reductions in the above described required coverages related to renovation, construction or completion of renovation or construction, nor other gaps, exceptions, or reductions.
  • Policy must be for replacement cost (not actual cash value also known as 'ACV' nor Agreed Value)
  • Hazard Insurance Policy must include what is commonly known in the property insurance industry as a “Standard Mortgagee Clause”
  • The mortgagee must receive written notice at least 30 days prior to any changes to the policy or listed insured parties. The mortgagee must receive written notice at least 30 days prior any non-renewal or cancellation of the policy for any reason other than non-payment. The mortgagee will receive written notice at least 10 days prior cancellation of the policy for non-payment.
  • The hazard insurance includes at least $500,000 to $1,000,000 of liability coverage depending on the project and the property
  • Required structural/dwelling coverage amounts varies but typically 90% or more of the estimated after rehab value of the property (and includes coverage for other structures if other structures exist such as unattached garages and decks)
  • The hazard insurance is not a homeowner policy
  • Proof of coverage or insurance binders including all requirements must be provided to Good Funds Lending, LLC prior to closing including hazard insurance agents/brokers are required to complete and sign a hazard insurance coverage confirmation form
  • A flood insurance policy is required if the property is in what we consider to be a high risk flood area.

Do you have any preferred vendors for title or hazard insurance?

We do not require you to use a certain title company or hazard insurance company, as long as the corresponding requirements for hazard and title insurance are met. Here are some companies our people have worked with successfully in the past; however, we make no representations or warranties about these companies. You should select the vendor that best meets your needs (provided they meet the requirements set forth in the loan requirements and documents).