When you see an LPHI charge on your mortgage statement, it likely stands for Lender Placed Hazard Insurance. Your mortgage company will buy insurance on your property if you don’t have it, or if what you have is not enough. The purpose of this insurance is to protect the lender’s financial interests if some kind of catastrophe occurs and your home is damaged or destroyed. The lender wants to be able to count on your home loan being paid.
Usually, homeowners are responsible for getting their own homeowner’s insurance in order to cover all possible hazards. If you have an LPHI charge from your mortgage company, you should try to find your own insurance because it will likely be cheaper. If you do have insurance, talk to your lender about why they have placed their own insurance on your property. It’s possible they simply have not received proof of your coverage, or perhaps the coverage you have purchased is not adequate to meet their requirements.
This type of lender-initiated cost should not come as a surprise to you. Mortgage companies are legally required to inform you when they order this type of insurance policy. If you did not receive any notice from your mortgage company, you might want to contact a real estate attorney for some advice on how to proceed.
Also called a forced-place insurance policy, LPHI charges will be added to your monthly mortgage payment. That means on top of the principal, interest and any escrow tax payments; you’re also paying for your mortgage company to insure your house. This isn’t an ideal scenario, so see what you can do about getting your own hazard insurance up to date so the LPHI charge disappears.
The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.