open mortgage clause

open mortgage clause

An insurance clause providing that the mortgagee (lender) will be paid in the event of a loss “as its interest may appear.”This is far less protection to the lender than a union mortgage clause,which stipulates that the policy will be payable to the mortgagee unless it,or its agents,were the cause of the loss.In other words,if the homeowner burns the house to the ground and no insurance is payable to the homeowner as a result,then the lender with only an open mortgage clause will also receive nothing,but a lender with a union mortgage clause will still be paid.