Mortgage, Foreclosure Sale, Fire Insurance


This note explores the question of a mortgagee's insurable interest under a standard mortgage clause as the process of foreclosure ripens his status from that of mortgagee to property owner. The author argues that while fire insurance recovery rights of the foreclosing mortgagee may appear to be a viable solution to apportionment of indemnity, when the rules are applied to deny recovery, the system becomes unjust. This creates an incentive for the mortgagee to avoid the foreclosure sale (when there is a fire loss to the property), so as to force the loss on the insurance carrier.



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.