Financial institutions have always wrestled with one main issue when it comes to tracking insurance on their loan collateral: staying properly protected at an affordable price. Since uninsured losses are rare, especially large losses, lenders try to spend as few dollars as possible on staff tasked with keeping track of insurance. However, the risk of a large uninsured loss and the regulations dictating that loans be properly tracked, lead to costs that are much higher than desired, as well as negative customer interactions, all of which could be avoided.
GAP coverage, also known as, Guaranteed Asset Protection or Guaranteed Auto Protection, has been a popular loan protection product since the early 1990’s. However, there has never been another time when it’s benefit to consumers and lender has been as essential as it is today. While obtaining GAP is an elective insurance--or waiver of residual loan balance in most states—there are many reasons why loan officers can and should make a persuasive purchasing argument to the buyer in today’s lending environment.
Mortgage lenders have a great deal of information to keep up with as the National Flood Insurance Program undergoes more changes. Here is a list of videos describing the latest changes in the NFIP program. This content is reposted from this link at FEMA.GOV. Maintaining accurate flood information can be challenging for financial institutions in the mortgage lending business. Check out our FORCE-PLACED FLOOD COVERAGE. Flood Protection provides coverage for lenders when a borrower fails to procure or maintain the required flood protection. Residential and commercial properties that are owner occupied, non-owner occupied, or vacant can be covered when the required flood protection is not maintained, canceled, lapsed or is deemed insufficient and the borrower does not secure a replacement policy. Also covered, are properties in flood zones without adequate flood insurance to meet the legal minimum required to protect the property.
Mortgage Impairment protection is a very powerful but often misunderstood set of coverages for lenders. It was originally designed for loan servicers in order to cover them for a loss that occurred when errors were made in administrative tasks, such as tracking insurance or for loss when something beyond the lender’s control went wrong like a property flooding that was not previously in a flood zone. The policy was considered backup coverage if the borrower did not have a policy that would pay, if the lender made certain errors, or if there were oversights in loan servicing. Mortgage Impairment (MI) is prevalent among financial institutions, however many lenders are unaware of what the policy actually covers, or may have forgotten that they have it and are missing out on valuable claim dollars. When is the last time you reviewed your MI (or E/O section of your package policy)?
A Vendor Single Interest (VSI) policy protects a financial institution, reduces administrative workloads and improves examinations.
