In addition to protecting your property, most property insurance policies include clauses that will also protect your lender. Because your lender has a financial interest in your home until the mortgage is fully paid, they also require compensation for any property insurance policy payouts. In these property insurance clauses, your lender will be referred to as the mortgagee. Wherever you see the term "mortgagor," that means you, the property owner.

A mortgagee clause is a property insurance provision granting special protection for a mortgagee (e.g., financial institution that has an interest in the property) named in the policy that, in effect, sets up a separate contract between the insurer and the mortgagee.

The clause establishes that loss to mortgaged property is payable to the mortgagee named in the policy and promises advance written notice to the mortgagee of policy cancellation. It also grants continuing coverage for the benefit of the mortgagee in the event that the policy is voided by some act of the insured (e.g., arson). The Mortgagee Clause specifies the obligations of the mortgagor in continuing coverage. The mortgagor would be expected to notify the insurer of any changes in ownership, occupancy, or exposure; pay any due premium; and submit a signed, sworn statement of loss within the appropriate time frame. Without the protection of the mortgagee clause, financial institutions would be unlikely to loan the large amounts of money necessary to purchase homes.

When you obtain your property insurance policy, you must ensure that the mortgagee is named using our legal name of Santander^® Bank, N.A. and the appropriate address, listed below.

While the term “mortgagee clause” typically refers to the mortgagee clause in your property insurance, there are clauses that are also directly part of your mortgage agreement. A common clause that will likely be included as part of your mortgage is an alienation clause.

Also referred to as a due-on-sale clause, an alienation clause requires you to make full payment of your mortgage if you sell or otherwise transfer the property. This prevents a new owner from assuming the mortgage under its current terms without the lender’s knowledge. Many mortgages are not assumable, so read your mortgage carefully and contact your lender if you plan to make any changes in ownership of your property.

Have additional mortgage questions? Check out our Mortgage FAQs, glossary of common mortgage terms, or contact a Mortgage Specialist.