Wildfire Risk Loan Document Provisions Now Included in Doss Docs Loan Packages

Wildfire risk isn’t just a problem for homeowners—it’s a growing threat to lenders. With insurers pulling out of high-risk areas, claims getting delayed, and new laws imposing restrictions on lenders making it harder to manage risk, the financial landscape has changed.

Lenders who do not implement provisions in their loan documents to address wildfire risk and other natural disasters are leaving themselves exposed. That’s why Doss Docs has updated its Business Purpose Loan Documents to include new wildfire risk provisions. These provisions give lenders greater authority over how insurance proceeds are used. Lenders also gain more control over how restoration is managed and whether properties should be rebuilt after a disaster.

Protecting our lenders is always our priority. That’s why Doss Docs Business Purpose Loan Documents now include these wildfire risk provisions. As a result, these safeguards help lenders manage insurance proceeds, restoration decisions, and changing natural disaster-related regulations.

These updates are available now, giving lenders the tools to better protect their loans. Moreover, if your loan documents do not include these critical protections, Doss Docs offers 50-state automated loan documents with these safeguards.

Wildfire Risk Loan Document Provisions Giving Lenders the Fastest, Most Advanced Protection

The days of assuming insurance will fully protect collateral are over. Supporting this, many properties in wildfire-prone and other disaster-affected areas are now underinsured, leaving a dangerous gap between the payout amount and actual rebuild costs. When borrowers lack the funds to rebuild, lenders are left carrying the financial burden.

New wildfire risk loan document provisions help mitigate this risk by giving lenders greater control over how insurance proceeds are used and how restoration is managed. Likewise, these provisions apply not only to wildfires but also to other natural disasters such as hurricanes, floods, and earthquakes.

The provisions include:

Insurance Proceeds for Risk Mitigation: Lenders can require that insurance proceeds be used to improve the property to protect from natural disasters. This ensures the property is not just restored but also improved for better protection against future disasters.
Fund Control Requirements: Lenders can require the use of a fund control company to monitor and oversee the restoration process. This ensures insurance proceeds are properly allocated and repairs are completed as planned.
Lender Authority to Refuse: Lenders can refuse to restore a property if it will not be defensible in its original condition. This protects lenders from financing reconstruction in areas where future losses are highly likely.
State or Local Forbearance Compliance: Additional provisions anticipate state or local forbearance measures, helping lenders comply with potential requirements while protecting their financial interests.

These new provisions strengthen lender protections after a wildfire or other natural disaster. Consequently, this reduces financial risk and ensure properties aren’t permanently stalled.

New Wildfire Risk Requirements for Borrowers

In addition to insurance-related provisions, lenders using Doss Docs Business Purpose Loan Documents now have the ability to require borrowers to take proactive wildfire risk mitigation measures, including:

Annual National Fire Protection Association (NFPA) Inspections & Certifications: Lenders may require annual fire safety inspections and certifications to ensure compliance with fire prevention standards.
Fire Mitigation Plans & Reporting in Wildfire-Prone Areas: Borrowers in designated high-risk zones may be required to implement and report on fire prevention strategies, such as vegetation management, fire-resistant construction materials, and defensible space creation.

These requirements shift risk mitigation to the front end. By doing so, they protect collateral before disaster strikes, rather than dealing with the consequences afterward.

The Impact of Wildfire Risk is Driving the Need for Stronger Lender Protections

Lenders who fail to address wildfire risk and other natural disasters in their loan documents could find themselves in financially devastating situations when borrowers are unable to recover. As a result, they may face increased financial exposure and legal challenges.

With Doss Docs Business Purpose Loan Documents, lenders can now:

Strengthen risk provisions to safeguard collateral.
Ensure insurance proceeds are properly used for restoration and risk mitigation.
Require risk prevention measures that reduce long-term exposure to loss.

These new wildfire risk and other natural disaster provisions are available immediately. If you’re already using Doss Docs, you are all set. If not, it’s time to make a change.

Protect your loans today with Doss Docs. Instant access, no subscription, 50-state compliant.