Recent demand for more insurance coverage by bank/ mortgage lenders?
I've owned my townhouse for 2 decades now. The last decade or so, every year, my mortgage lender - Bank of America - has asked for proof of building insurance. My townhome is covered by the HOA's master policy (including walls-in) and every time, I send the policy without further notice from the bank.
This year, I again received notice, sent in proof of the policy, but instead I get a letter back saying that the insurance is inadequate and that I need to buy additional insurance OR the bank will buy it for me.
I'm wondering why this is happening now, whether others are facing this issue, and what I should do next. I will call the bank this week to find out more. I'm fortunate I only have a smaller amount on the loan left and if need be, I can pay off the mortgage all at once (was hoping to pay it off gradually while using the $ for something else) but I know others do not have this option. (And might have to scrimp further or even lose their home.)