Q. We have an insured whose house has been foreclosed and the mortgage company has requested policy cancellation and the returned premium. Can they do this?
A. Yes, in the event of a foreclosure under a deed of trust, the lender may cancel an insurance policy covering the foreclosed property and is entitled to any unearned premiums from the policy if the lender:
- credits the amount of the unearned premiums against any deficiency owed by the borrower; and
- delivers to the borrower any excess unearned premiums not credited against a deficiency