Mortgage - Loss Payee

[ChrisB]

We bought another farm last fall and used equipment as collateral. The bank with the mortgage just asked to be named "Loss Payee" on the equipment with the insurance company. While I understand that bank requesting this; I am wondering if they can force me to do this at this point? My thinking is - if our main chore tractor has a value of $50,000 and is totaled in a fire, we will need that money to replace the tractor. If the mortgage company is the payee, they get the money and I assume the money would go toward the mortgage balance; but we will then be required to get another loan to replace the tractor. Do I have a legal right to just tell the bank we are good with how things are currently set up? Or should I just go ahead and tell the insurance company to make them the Payee since odds are slim that we would ever have a claim anyway?

 

[J&D Cattle]

I am a loan officer and I would let you go buy a new tractor with insurance monies and then file a UCC on the new one. We would want to be loss payee on it then with your insurance company.

 

[Caustic Burno]

We bought another farm last fall and used equipment as collateral. The bank with the mortgage just asked to be named "Loss Payee" on the equipment with the insurance company. While I understand that bank requesting this; I am wondering if they can force me to do this at this point? My thinking is - if our main chore tractor has a value of $50,000 and is totaled in a fire, we will need that money to replace the tractor. If the mortgage company is the payee, they get the money and I assume the money would go toward the mortgage balance; but we will then be required to get another loan to replace the tractor. Do I have a legal right to just tell the bank we are good with how things are currently set up? Or should I just go ahead and tell the insurance company to make them the Payee since odds are slim that we would ever have a claim anyway?

Bank recalled a loan on me on a house fire.
I owned a piece of burnt up property when they finished.
When I bought the house interest rates were 7% when it burned 16%.
They wanted that money to lend out at a higher rate. The sorry pieces of shyt offered to refinance at 16%.
I completely understood why my grandpa loathed a banker.

 

[TexasBred]

We bought another farm last fall and used equipment as collateral. The bank with the mortgage just asked to be named "Loss Payee" on the equipment with the insurance company. While I understand that bank requesting this; I am wondering if they can force me to do this at this point? My thinking is - if our main chore tractor has a value of $50,000 and is totaled in a fire, we will need that money to replace the tractor. If the mortgage company is the payee, they get the money and I assume the money would go toward the mortgage balance; but we will then be required to get another loan to replace the tractor. Do I have a legal right to just tell the bank we are good with how things are currently set up? Or should I just go ahead and tell the insurance company to make them the Payee since odds are slim that we would ever have a claim anyway?

Bank recalled a loan on me on a house fire.
I owned a piece of burnt up property when they finished.
When I bought the house interest rates were 7% when it burned 16%.
They wanted that money to lend out at a higher rate. The sorry pieces of shyt offered to refinance at 16%.
I completely understood why my grandpa loathed a banker.

Most any mortgage company will require that the property be rebuilt then give you any excess funds left out of the insurance settlement (if there are any) or they'll simply apply it to your loan to pay it off and give you what's left. Eitehr way they've lost their collateral and either have to have the collateral replaced or the note paid off.

 

[TennesseeTuxedo]

Why wasn't the farm itself adequate collateral?

 

[J&D Cattle]

Why wasn't the farm itself adequate collateral?

I would guess the equipment was used in lieu of a down payment. I've had to do this a couple of times to get the loan to an adequate loan to value for approval.

 

[TennesseeTuxedo]

Why wasn't the farm itself adequate collateral?

I would guess the equipment was used in lieu of a down payment. I've had to do this a couple of times to get the loan to an adequate loan to value for approval.

I didn't consider that angle. Good point.

 

[ddd75]

Why wasn't the farm itself adequate collateral?

come on .. this is a bank.

they need the farm.. all your equipment, animals, first born, and possibly even the entire amount in cash to hold on to.

 

[TexasBred]

We bought another farm last fall and used equipment as collateral. The bank with the mortgage just asked to be named "Loss Payee" on the equipment with the insurance company. While I understand that bank requesting this; I am wondering if they can force me to do this at this point? My thinking is - if our main chore tractor has a value of $50,000 and is totaled in a fire, we will need that money to replace the tractor. If the mortgage company is the payee, they get the money and I assume the money would go toward the mortgage balance; but we will then be required to get another loan to replace the tractor. Do I have a legal right to just tell the bank we are good with how things are currently set up? Or should I just go ahead and tell the insurance company to make them the Payee since odds are slim that we would ever have a claim anyway?

A reputable mortgage company will simply tell you to buy you another tractor, bring them all the information about the new purchase (make model serial number), execute a new UCC-1 and endorse the insurance check over to you. It may or may not cover the entire cost of the new tractor so you may have to pay part of the purchase price. Their loan is even more secure with the new tractor than it was with the old.

 

[TexasBred]

Why wasn't the farm itself adequate collateral?

come on .. this is a bank.

they need the farm.. all your equipment, animals, first born, and possibly even the entire amount in cash to hold on to.

You're confusing a bank with a payday loan office. You need to quit using those places.

 

[ChrisB]

Why wasn't the farm itself adequate collateral?

I overpaid for the property for one thing. It was sold with everyone having one chance to submit their highest bid, a couple local BTO's involved in the bidding, and it bordered our home farm. So long story short, I bid what I felt would buy it. Probably overbid by several hundred an acre. But we did put 20% down and went with guaranteed loan through FSA. Bank really has no risk that I can see but they still wanted some equipment as collateral and now want to be named loss payee. I guess I look shady or they think land prices are going to tumble.

 

[ddd75]

Why wasn't the farm itself adequate collateral?

come on .. this is a bank.

they need the farm.. all your equipment, animals, first born, and possibly even the entire amount in cash to hold on to.

You're confusing a bank with a payday loan office. You need to quit using those places.

yea right. i've dealt with hundreds of banks and what some of them ask for is insane. Maybe your little bank has open arms and gives money to everyone with a handshake and signature but I doubt it.

 

[callmefence]

come on .. this is a bank.

they need the farm.. all your equipment, animals, first born, and possibly even the entire amount in cash to hold on to.

You're confusing a bank with a payday loan office. You need to quit using those places.

yea right. i've dealt with hundreds of banks and what some of them ask for is insane. Maybe your little bank has open arms and gives money to everyone with a handshake and signature but I doubt it.

hundreds...that may be the problem, try building a relationship with one. fwiw they don't give it away....they rent it

 

[ddd75]

You're confusing a bank with a payday loan office. You need to quit using those places.

yea right. i've dealt with hundreds of banks and what some of them ask for is insane. Maybe your little bank has open arms and gives money to everyone with a handshake and signature but I doubt it.

hundreds...that may be the problem, try building a relationship with one. fwiw they don't give it away....they rent it

i have several good relationships with bank presidents and vice presidents where I can go in and get any amount of money I need.

I never put all my eggs in 1 basket, thats not the smartest thing to do when you need funding available at all times.

It takes a lot of time and searching to find banks that will lend to non traditional borrowers. Sometimes those banks change boards and their lending style changes.

 

[callmefence]

yea right. i've dealt with hundreds of banks and what some of them ask for is insane. Maybe your little bank has open arms and gives money to everyone with a handshake and signature but I doubt it.

hundreds...that may be the problem, try building a relationship with one. fwiw they don't give it away....they rent it

i have several good relationships with bank presidents and vice presidents where I can go in and get any amount of money I need.

I never put all my eggs in 1 basket, thats not the smartest thing to do when you need funding available at all times.

It takes a lot of time and searching to find banks that will lend to non traditional borrowers. Sometimes those banks change boards and their lending style changes.

tried to like this..dam good response and very true.......hats off

 

[melking]

BANKS ARE EVIL! Now, having got that out of the way, I have always been under the impression that a bank cannot change any of the terms of a mortgage after the fact without consent of the mortgagor. I would read it carefully because I don't think they can make you add them after. By the way, BANKS ARE EVIL.

 

[TexasBred]

BANKS ARE EVIL! Now, having got that out of the way, I have always been under the impression that a bank cannot change any of the terms of a mortgage after the fact without consent of the mortgagor. I would read it carefully because I don't think they can make you add them after. By the way, BANKS ARE EVIL.

Depends on what you're referring to Mel.....some things the borrower might do can trigger actions from the lender to protect the bank's interest. Some things the borrower does not do can trigger action. Banks to not make loans just so they can repossess or foreclose.

 

[J&D Cattle]

BANKS ARE EVIL! Now, having got that out of the way, I have always been under the impression that a bank cannot change any of the terms of a mortgage after the fact without consent of the mortgagor. I would read it carefully because I don't think they can make you add them after. By the way, BANKS ARE EVIL.

The loan could be modified and a Change of Terms Agreement signed in order to release the old tractor and then add the new one. We do collateral swaps all the time but yes, both the bank and the borrowers would sign a new agreement. TB is right too; the actions of a borrower can trigger certain responses from a bank.