Profile: versability1
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“…so hire a few more people.”
First, where do I get the funds to pay these people? We operate on a razor thin margin. If I hired “a few more people” for every regulation I would lose money and no longer be in business. A credit union is a not for profit enterprise but it cannot lose money and remain in business.
Second, while a data base is in place for escrow accounts no such system exists for non-escrow accounts. Go back and read my post. Who do I pay? The insurance company directly or an agent? Once insurance is force placed things go downhill very quickly and the chance of my getting paid back is slim to none. Even if I could find out who to pay I am not going to misuse the credit union’s funds to pay for additional riders on a homeowner’s policy.
You’re making a process I know to be simple sound more complicated than it is. I worked for an insurance tracker, so I’m well aware that the codes are exactly the same to pay a company or agency regardless of the escrow status. In fact, the escrow status is simply one extra coding step. You can remove that step. None of your arguments have any validation. There’s no reason a non-escrow loan can’t be treated the same as an escrow loan and that is a 100% verifiable FACT that you are only disputing in order to dodge regulation. Nice try, but I’m an expert on loan tracking, and I know better.
….and so ends any attempt at civility. Really, there is no need to lob “three score barrels of powder” at me.
Answers to your questions.
1. It is a Lloyds of London policy written through SWBC. The cost is $1.50 per $100 of coverage plus 3% tax. We are absolutely not self-insuring. Also, there is absolutely no add-on costs. I charge the customer exactly what SWBC charges me.
2.The renewal cost of the current HO Ins policy is $1,340.00. A very expensive HO Ins policy. I can protect my interest for only $463.50. I am the owner of the note. It is my money that I am paying out. No one is insuring me against a loss. The customer has insufficient funds in his escrow account to cover the cost of his HO Ins policy, nor the forced fire policy I potentially have to place.
3. I agree it is better for the customer to have his own insurance. He has stopped paying my loan, but he absolutely… more »
You seem to have a very strong point of view. Kindly explain to me your rational for why I have to risk more of my own money, paying a very expensive HO Ins policy, for a customer who is no longer paying me, when I can protect my interest in the property for 1/3 as much. « less
Versability1, We ask that you refrain from calling other commenters names, even if you believe they are not being honest. Please remember that the purpose of Regulation Room is to provide CFPB with information about the proposed rule. The kind of participation that really matters is when people explain not only what they think the agency should (or shouldn’t do), but why. Please focus on the proposal and avoid personal attacks.
Thanks, versability1. The current draft makes this point about insurance trackers, but we will add lenders to the final version.
Hi Versability1 – We think this is pretty clear in the summary, see the last sentence in section 6 – “S/he argued that the law should categorically prohibit charging REO insurance against the borrower’s escrow.”
Here is a real world example which will illustrate why this proposed rule is unfair.
I am a mortgage originator and loan servicer. I hold all the loans I make.
I have a customer who has stopped making payments on his account. He is 6 months past due on his loan and has refused to make contact with us. He is in foreclosure. I escrow for his taxes and his insurance. He has a large shortage in his escrow account. His homeowner’s renewal is due on October 23, 2012. The renewal premium is $1,398.00.
The proposed rule would require that I pay his insurance premium from his escrow account even though he does not have enough money in his escrow account to cover the premium.
I can write forced placed insurance to cover my interest in his property for $460. Yes, the insurance… more »
Here are the steps I have taken to deal fairly and completely with this customer.
1. I have informed him by mail that
(a) I will no longer be escrowing for his homeowner’s insurance.
(b) His policy will be renewing on October 23, 2012.
(c) He needs to contact his agent to make an arrangement for payment on the policy.
(d) as long as he keeps the policy in force, we will not issue forced placed fire insurance.
(e) if he allows his insurance to cancel we will write a forced placed policy providing coverage to protect my interest in the property at a cost of $460.00.
(f) if forced placed insurance is required, he will be responsible for paying this cost.
(g) the forced placed policy is for my benefit only and is insufficient for his needs.
2. I have redone his escrow analysis and reduced his monthly tax escrow payment.
The steps I have taken seem perfectly fair and reasonable.
This proposed rule implies that even if the borrower has stopped paying the loan, I as the mortgage holder and loan servicer have a responsibility to protect the borrower, no matter how much money it will cost me. In today’s world it could take years to finally take back a property. This rule would require me to pay the borrower’s policy premium for 2, 3 or even 4 years, even though I could protect my interest in his property for 1/3 the cost.
Of course, at any time, the borrower can call the insurance agent, cancel the policy and receive the refund, a refund of my money, not his. Asking me to pay his premium monthly instead of yearly is a ridiculous alternative, in my estimation.
The borrower is being unfairly enriched at the expense of the mortgage holder. This is not the way the our American system is designed to function. When are individuals going to be held accountable for their actions or inactions?
I know that the public is angry and wants to make Wells Fargo and Bank of America pay for everything, as retribution for the mortgage meltdown. But small mortgage holders like myself are being forced to pay for the sins of others. The rule is unfair to me and is simply wrong, based upon how our American system of economics functions.
I strongly recommend that the CFPB rethink its rule and implement a new rule which requires the mortgage servicer to inform the borrower of the situation and give the borrower the opportunity to take responsibility for himself, as I have outlined above.
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I don’t understand how paying an insurance policy for a Non-Escrow loan is so difficult. You know the process already because you’re obviously already doing it for Escrow loans. I’m not seeing the difficulty in providing the same service to Non-Escrow customers. Don’t you keep a database of who is agent or company billed for your Escrow customers? The systems are clearly in place by your own admission. You’re just adding more volume, so hire a few more people.
You’re making a process I know to be simple sound more complicated than it is. I worked for an insurance tracker, so I’m well aware that the codes are exactly the same to pay a company or agency regardless of the escrow status. In fact, the escrow status is simply one extra coding step. You can remove that step. None of your arguments have any validation. There’s no reason a non-escrow loan can’t be treated the same as an escrow loan and that is a 100% verifiable FACT that you are only disputing in order to dodge regulation. Nice try, but I’m an expert on loan tracking, and I know better.
Your arguments make no sense. As an expert in the loan tracking industry, I can 100% indisputably tell you that there is no extra cost whatsoever to treating a non-escrow and an escrow loan the same. You’re flat out lying, and I have to call you out. I’ve worked in every loan tracking system, and if you’d like to contact me for a free consultation on your credit union’s loan servicing software, simply do a google search for Versability or “The Boy Who Cried Force Placed Insurance” and I’d be more than happy to consult your supposed Credit Union on how to accomplish this at absolutely no cost. Otherwise I’d thank you to stop lying in this forum, because I know better and I WILL call out your lies.
Here’s some real world questions for your real world example:
1) How are you writing the policy? If you’re the one writing it, does that mean you’re underwriting it? If you are, then you’re self insuring, and you’re actually not serving your own “needs” since you’d be the one paying out the insurance. That makes no sense.
2) 99.99% of the time it has been proven beyond any shadow of any doubt that the force placed policies are overpriced and unnecessary. You’re going to be paying the premium one way or the other. If you want to call the insurance company to cancel some of the coverages or add the insurance cost to the borrower’s loan, that’s the purpose of an escrow account, and if they default, you’re insured against… more »
3) in every case, it is always cheaper and better for everyone involved to have the preferred voluntary policy continued rather than placing a force-placed policy. You’re not being forced out of anything. « less
I think it’s important to emphasize that an insurance tracker should not be allowed to act as both the loan servicer and the force-placed insurer in the event of a claim. The insurer/mortgager relationship should be an adversarial relationship. If 1 lawyer can’t represent opposing clients in a case, then 1 company shouldn’t be allowed to be your only point of contact for both sides of an insurance matter. Currently the Insurance Tracker acts as both.
Borrowers need not only to be able to update their information online, but they need to be able to do it proactively on the loan servicer’s website. When we just say “online” the banks state they can do it online, but it’s at Assurant & QBE’s websites. Nobody would know to go to those until they’re told they don’t have the required insurance, and again, they’re only updating that information directly to the Insurance Tracker/Force-Placed Insurer. They have no way of directly providing the information to the Loan Servicer. People won’t go to a website they don’t trust to update their personal information (if you’d like to see an example, go to ihaveinsurance.com) and it also leads to confusion when a Loan Servicer’s… more »
Just to clarify, REO insurance should NEVER be charged to the borrower. The problem isn’t the cost of REO, it’s that it’s even being charged to the consumer in the first place. REO insurance NEVER covers the borrower. It is intended to cover the structure after foreclosure.
Ignore that…meant to post it above…
Just to clarify, REO insurance should NEVER be charged to the borrower. The problem isn’t the cost of REO, it’s that it’s even being charged to the consumer in the first place. REO insurance NEVER covers the borrower. It is intended to cover the structure after foreclosure.