Life is unpredictable. From illness to divorce to job loss, many factors can take a toll on your income that can leave you struggling to pay your monthly mortgage payments on time. If you have lost your job and are unable to make your monthly mortgage payments, job loss mortgage insurance can help cover those […]
A Loan Officer’s Guide to Loss History Reports
Now more than ever, people who are interested in buying a home are demanding loss history reports from the seller as a contingency to a purchase offer. Buyers don’t want to be hit with any surprises about the condition of the home when they purchase it. As a loan officer, it’s important for you to know what a loss history report is and how it affects Kansas City home loans for potential homeowners
What is a Loss History Report?
A loss history report is simply a documented history of damages or losses connected to a particular property. These reports generally span over the past 7 years and explain in detail all past events that caused significant damage to the property and what repairs were done.
Loss History Reports Can Affect Home Loans
Loss history reports can affect a borrower’s chance of getting a Kansas City home loan by making a transaction fall through due to previous damage to a home. If the damage was not repaired and lowered the value of the home, a lender can deny borrowers a Kansas City home loan or financing.
Where Can You Get a Loss History Report?
LexisNexis maintains loss history databases for insurance claims on homes and automobiles called the Comprehensive Loss Underwriting Exchange (CLUE). Before this database existed, insurance companies would have to call the previous insurer for the home to verify if any damage was caused and repaired.
If the CLUE report indicates that the seller has not sustained an insurance loss within the past five years, the buyer can feel comfortable that the insurance loss history of the property won’t impact the availability or pricing of homeowners insurance. A comprehensive loss report will likely give the seller an advantage over another person’s property where the insurance loss history is not known.
Where Else Can a Loss History Report Be Used?
CLUE is also used by homeowner insurance providers to offer advice about much home insurance coverage is right for each buyer. For potential homebuyers, it’s a good idea to request a CLUE report from the seller when they make their initial offer on a home. The report will give them insight into what to tell the home inspector to look for when reviewing the condition of the property.