by Mark Sarrett
MortgageOrb
REQUIRED READING: With foreclosures remaining a pressing concern for all financial institutions, mortgage servicers are aggressively seeking new and proactive ways to curb losses. A financial institution that pays attention to the insurance status of its properties through a mandated, regimented program of internal review and external inspection will reap benefits compared to servicers that de-emphasize this aspect of their business.
Wise financial institutions should be aware of the insurance status of all of their properties, so that when their properties appear to be headed for foreclosure, the insurance protection is never in doubt. They should diligently enforce their requirement to be named on any mortgagor’s primary (i.e., homeowner) policies. Servicers may utilize an insurance tracking company to outsource this aspect of their protection plan, or they may use their own internal staff. Either way, diligence is the most important factor in protection.
Protection may come in various forms. Most borrowers provide protection to the servicer through their personal homeowner or commercial hazard policy that names the financial institution as the mortgagee. Requiring and maintaining this protection is essential for the servicer, as it is typically the least-expensive avenue for insurance coverage.
Other solutions available include for the servicer to directly purchase hazard insurance or blanket hazard insurance to protect its interest. These policies are placed once it is discovered that the servicer’s interest in the property is exposed through the expiration or cancellation of a borrower’s coverage. Since primary outside insurance typically offers more coverage than the average lender-directed insurance policy and usually has a lower deductible, maintaining the borrower’s coverage is recommended whenever possible. >>READ ENTIRE ARTICLE
Thursday, December 16, 2010
Thursday, November 4, 2010
What are the regulatory aspects of representing a mortgagee on their hazard claims?
According to the National Association of Insurance Commissioners, in order to represent an insured one must be licensed as a public insurance adjuster.
As of October 2010, 44 states and the District of Columbia license public insurance adjusters. Most states require fingerprinting, licensing bonds, as well as the successful completion of an examination and continuing education requirements. Currently three states disallow public adjusting and consider it the unauthorized practice of law.
For more information please read: Hazard Insurance Recovery: A Regulatory Overview by Ron Reitz
As of October 2010, 44 states and the District of Columbia license public insurance adjusters. Most states require fingerprinting, licensing bonds, as well as the successful completion of an examination and continuing education requirements. Currently three states disallow public adjusting and consider it the unauthorized practice of law.
For more information please read: Hazard Insurance Recovery: A Regulatory Overview by Ron Reitz
Wednesday, October 20, 2010
October 24, 2010 Deadline for Florida Homeowners to File Hurricane Wilma Insurance Claims Approaching
The deadline for many Florida homeowners to file insurance claims for Hurricane Wilma is approaching. The five-year anniversary of Wilma is Oct. 24, and Florida has a five-year statute of limitations to file lawsuits for property insurance claims.
For policyholders who still have damage from the hurricane, this means:
Homeowners whose claims have been denied have five years from the date of the denial to pursue the claim.
People filing a new claim must do so by Oct. 24, according to insurance attorneys. Some homeowners who filed Wilma claims in recent years said they didn't do so right after the storm because they were incorrectly told by their insurers that the damage did not meet the deductible. Still, new claims filed years after a storm "would be scrutinized ... because policyholders have some obligation of timely reporting claims," said Tom Streukens, director of operations at the Florida Insurance Guaranty Association, known as FIGA.
For policyholders who still have damage from the hurricane, this means:
Homeowners whose claims have been denied have five years from the date of the denial to pursue the claim.
People filing a new claim must do so by Oct. 24, according to insurance attorneys. Some homeowners who filed Wilma claims in recent years said they didn't do so right after the storm because they were incorrectly told by their insurers that the damage did not meet the deductible. Still, new claims filed years after a storm "would be scrutinized ... because policyholders have some obligation of timely reporting claims," said Tom Streukens, director of operations at the Florida Insurance Guaranty Association, known as FIGA.
Tuesday, September 28, 2010
How can Mortgage Loan Servicers Prepare for Disasters?
by Kim Cary. Senior General Adjuster, Quality Claims Management
Hurricane season has officially started, and will soon be followed by wildfire season and then winter. Each of these seasons poses different challenges to a mortgage servicer.
For mortgage servicers, an important key to preparing for these potential disasters is fine-tuning service-level agreements with the vendors who provide insurance tracking and coverage services, pursue hazard claim recovery services when losses occur, or provide preservation and protection activities. It is also important to ensure that internal policies and procedures are current and reviewed with your staff.
Hurricane losses may be covered by wind, flood or hazard policies, or a combination of these. Is this information being adequately tracked? Are the borrowers’ policies being renewed or are new policies being lender-placed? Are the policy limits being correctly set?
Servicers need to seek assurances that in the event of a widespread disaster, inspection companies have the means to inspect vacant homes, board broken doors and windows, and tarp damaged roofs in a timely manner. They must also be prepared to inspect homeowner repairs. Loss draft departments be adequately staffed to handle the influx of insurance checks endorse and repairs that need to be tracked. Repairs and rebuilds may be delayed if servicers cannot quickly disburse funds from escrow accounts to homeowners wanting to pay their contractors.
There are early warnings that this year’s atmospheric and ocean conditions are similar to 2005 when Katrina hit the Gulf Coast. Some New Orleans homeowners are still trying to rebuild. Now there is an added threat of damage from the oil spill. Pro-activity on the part of servicers can mitigate future homeowner losses and subsequent repairs.
Wildfire seasons resulted in thousands of homes burning in several Western states over the last several years. This exposed a problem of under-insurance. Many homeowners mistakenly relied on their carrier to accurately set policy limits that were never updated to reflect changes in the value of their personal property, additions and add-ons, building codes and reconstruction costs. To date, a high percentage of homes have never been rebuilt because homeowners lacked sufficient coverage. It is necessary to review insuring requirements with lender-placed carriers.
Winter in the Northern states brings the threat of frozen pipes in vacant properties. Most carriers have coverage exclusions for frozen plumbing when properties are not adequately winterized or heat is not maintained. Lender- placed carriers are beginning to deny ensuing water damage when frozen pipes occur. As a result, preservation companies must winterize properties immediately upon vacancy confirmation. Most investors and mortgage insurers require servicers to preserve and protect vacant properties and will certainly review property maintenance records to ensure, at a minimum, that proper winterization is performed.
Water damage is often caused from ground water seeping into basements. Under normal circumstances, a home’s sump pump removes the water from the basement before mold can occur. However, a vacant home likely does not have electricity running which means the sump pump is not working and seeping ground water can easily flood the basement. This type of damage can become extensive and is typically excluded in policies. Power should be maintained to eliminate potential flooding.
It is also critical that preservation companies ensure properties are secure, and if a property is broken into, that it is quickly re-secured to prevent squatters or vandalism.
Insurance policies require servicers, as the insured, to do certain things. One of the most important is to notify carriers upon discovering a property is vacant or if there is any known increased risk that a loss could occur.
Servicers should be confident that should a large scale disaster occur, their hazard claims recovery partner is prepared to review, file and manage a high volume of claims in a short period of time. It is a good idea to proactively discuss this with your partners to determine their level of preparation and ability to handle sudden and large spikes in damaged property referrals.
It is also likely that each borrower’s policy will be different than the next. Therefore, it can be helpful if your hazard recovery partner is well-versed in policy interpretation and coverage assessment and qualified and licensed to represent and assist homeowners as well as mortgagees.
Is your team ready for hurricane, wildfires and winter season disasters? Are your partners experienced, knowledgeable and able to ramp up their teams and subcontractors to handle sudden, unexpected spikes in claims activity? Now is the time to take a few moments to prepare for the expected “unexpected.”
Hurricane season has officially started, and will soon be followed by wildfire season and then winter. Each of these seasons poses different challenges to a mortgage servicer.
For mortgage servicers, an important key to preparing for these potential disasters is fine-tuning service-level agreements with the vendors who provide insurance tracking and coverage services, pursue hazard claim recovery services when losses occur, or provide preservation and protection activities. It is also important to ensure that internal policies and procedures are current and reviewed with your staff.
Hurricane losses may be covered by wind, flood or hazard policies, or a combination of these. Is this information being adequately tracked? Are the borrowers’ policies being renewed or are new policies being lender-placed? Are the policy limits being correctly set?
Servicers need to seek assurances that in the event of a widespread disaster, inspection companies have the means to inspect vacant homes, board broken doors and windows, and tarp damaged roofs in a timely manner. They must also be prepared to inspect homeowner repairs. Loss draft departments be adequately staffed to handle the influx of insurance checks endorse and repairs that need to be tracked. Repairs and rebuilds may be delayed if servicers cannot quickly disburse funds from escrow accounts to homeowners wanting to pay their contractors.
There are early warnings that this year’s atmospheric and ocean conditions are similar to 2005 when Katrina hit the Gulf Coast. Some New Orleans homeowners are still trying to rebuild. Now there is an added threat of damage from the oil spill. Pro-activity on the part of servicers can mitigate future homeowner losses and subsequent repairs.
Wildfire seasons resulted in thousands of homes burning in several Western states over the last several years. This exposed a problem of under-insurance. Many homeowners mistakenly relied on their carrier to accurately set policy limits that were never updated to reflect changes in the value of their personal property, additions and add-ons, building codes and reconstruction costs. To date, a high percentage of homes have never been rebuilt because homeowners lacked sufficient coverage. It is necessary to review insuring requirements with lender-placed carriers.
Winter in the Northern states brings the threat of frozen pipes in vacant properties. Most carriers have coverage exclusions for frozen plumbing when properties are not adequately winterized or heat is not maintained. Lender- placed carriers are beginning to deny ensuing water damage when frozen pipes occur. As a result, preservation companies must winterize properties immediately upon vacancy confirmation. Most investors and mortgage insurers require servicers to preserve and protect vacant properties and will certainly review property maintenance records to ensure, at a minimum, that proper winterization is performed.
Water damage is often caused from ground water seeping into basements. Under normal circumstances, a home’s sump pump removes the water from the basement before mold can occur. However, a vacant home likely does not have electricity running which means the sump pump is not working and seeping ground water can easily flood the basement. This type of damage can become extensive and is typically excluded in policies. Power should be maintained to eliminate potential flooding.
It is also critical that preservation companies ensure properties are secure, and if a property is broken into, that it is quickly re-secured to prevent squatters or vandalism.
Insurance policies require servicers, as the insured, to do certain things. One of the most important is to notify carriers upon discovering a property is vacant or if there is any known increased risk that a loss could occur.
Servicers should be confident that should a large scale disaster occur, their hazard claims recovery partner is prepared to review, file and manage a high volume of claims in a short period of time. It is a good idea to proactively discuss this with your partners to determine their level of preparation and ability to handle sudden and large spikes in damaged property referrals.
It is also likely that each borrower’s policy will be different than the next. Therefore, it can be helpful if your hazard recovery partner is well-versed in policy interpretation and coverage assessment and qualified and licensed to represent and assist homeowners as well as mortgagees.
Is your team ready for hurricane, wildfires and winter season disasters? Are your partners experienced, knowledgeable and able to ramp up their teams and subcontractors to handle sudden, unexpected spikes in claims activity? Now is the time to take a few moments to prepare for the expected “unexpected.”
About Quality Claims Management
Quality Claims Management Corporation
QCMC's core focus is unparalleled expertise in policy coverage and the technical aspects of mortgagee and homeowner claims. QCMC has worked with homeowners and businesses including those affected by catastrophic natural disasters such as the 2003 and 2007 Southern California Wildfires, and Hurricanes Katrina, Rita and Wilma.
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