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#1978891 - 11/25/14 02:41 PM Borrower self-insured
HRH Okie Banker Offline
Power Poster
Joined: Jan 2003
Posts: 3,070
Oklahoma
Have any of you worked with a borrower that self insures his collateral/property? I'm wondering what to look for here
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#1978898 - 11/25/14 02:53 PM Re: Borrower self-insured HRH Okie Banker
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,898
Galveston, TX
Significant liquid assets.
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#1978906 - 11/25/14 03:13 PM Re: Borrower self-insured HRH Okie Banker
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
I can't say that I have but if the occasion ever arose I would insist getting our attorneys involved to draft an agreement to make sure the bank is protected just in case a part of our collateral was destroyed and the "self insurer" decided they didn't want to rebuild that particular piece of collateral.

If flood insurance is involved then there is no way under any circumstance you can accept a self insured situation, unless you are dealing with state owned property and they (the state) have an adequate self-insured program in place.
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#1978911 - 11/25/14 03:16 PM Re: Borrower self-insured HRH Okie Banker
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,898
Galveston, TX
"Self-insured" basically means they have no insurance. There is no such thing. If a loss is involved, they would have to pay off the loan from other liquid assets.

As Dan said, - for flood insurance - no way. For other hazard insurance - I wouldn't blink an eye if my applicant was Bill Gates or Warren Buffett. I would be a little skeptical of everyone else.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1978932 - 11/25/14 03:43 PM Re: Borrower self-insured HRH Okie Banker
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,281
I have seen this accepted with a letter of credit in place.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
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#1978983 - 11/25/14 04:54 PM Re: Borrower self-insured HRH Okie Banker
HRH Okie Banker Offline
Power Poster
Joined: Jan 2003
Posts: 3,070
Oklahoma
I will go with attorney review. I will let you know what I find out. The building is leased to a major pharmacy chain that says it is self-insured. Thanks everyone.
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Just working here until I get my letter from Hogwarts.

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#1978998 - 11/25/14 05:26 PM Re: Borrower self-insured HRH Okie Banker
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,898
Galveston, TX
If the building is leased, what does the tenant have to do with anything???
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1979057 - 11/25/14 06:52 PM Re: Borrower self-insured HRH Okie Banker
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,281
Likely a triple net lease with tenant responsible for everything. There should be credit analysis of the tenant.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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