Glossary

Mortgagee clause

The policy condition that gives the lender its own right to be paid for dwelling losses and protects that right even when the owner's claim is denied.

Also called: mortgage clause, standard mortgage clause

The mortgagee clause is a condition in Section I of the standard ISO homeowners form that spells out what the lender is owed. It does three things. A loss payable under Coverage A (dwelling) or Coverage B (other structures) is paid to the mortgagee and you, as interests appear. If the insurer denies your claim, that denial does not apply to the lender's valid claim, provided the lender has reported changes in ownership, occupancy or risk it knows of, paid any premium you neglected to pay, and filed a signed, sworn statement of loss within 60 days after being asked. And the insurer must give the lender at least 10 days' notice before canceling.

Say, hypothetically, that a fire destroys a house and the insurer denies the owner's claim for a policy violation. A lender that met those conditions can usually still collect what it is owed, and the insurer may then step into the lender's position against the borrower.

The clause protects the lender, not you. A practical effect is that the lender co-signs claim checks and often releases repair money in stages. Delays are common when the check sits with a servicer waiting on inspections; see claim checks, holdbacks and when the money arrives. For a longer walk-through, read the mortgagee clause explained.

Last reviewed October 10, 2026

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Related terms

Mortgagee The lender that holds the mortgage on the home, listed on the declarations page so it gets cancellation notices and shares in payments for dwelling damage. Loss payee A party named on a policy to receive claim money for a particular item or property up to its financial stake, such as a lender or lessor. Additional interest A person or business with a financial stake in the insured property, such as a lienholder, listed on the policy to get notices but not coverage. Escrow account A lender-held account that collects a share of your annual property tax and insurance bills with each mortgage payment and pays them when due. Force-placed insurance Coverage a mortgage servicer buys on your home and bills to you when it believes your own policy has lapsed or falls short of loan requirements.

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