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#1597365 - 08/26/11 08:43 PM Flood Insurance Vendor
BOTO67 Offline
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Joined: Mar 2010
Posts: 15
Arkansas
Hello!!

My bank uses a third party vendor to track our flood insurance, send our force placed letters and force place insurance. They only send letters every two weeks. As a result, the letters may not be sent on day 1, day 30 and day 45. They are typically sent later and the force placed policy may be enforced as late as 90 days after the first letter.

The third party vendor tells us that they have not been criticized for this by regulators. So long as the policy is placed after 45 days, there is no violation. Incidentally we are covered by a blanket policy during that period.

I'm concerned about our regulators citing us for a flood violation. Do you agree that we are at risk?

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Flood Compliance
#1597372 - 08/26/11 08:48 PM Re: Flood Insurance Vendor BOTO67
Dan Persfull Offline
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Dan Persfull
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Posts: 47,517
Bloomington, IN
You have to give the borrower 45 days from the date of the letter to obtain flood insurance, they be placing within 45 days of their letter but they are putting you at risk. Most likely your "blanket" policy will not meet the regulatory coverage requirement as it insures you and not the borrower therefore you are looking at CMPs for not having proper coverage.

Time for a new vendor IMO.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1597374 - 08/26/11 08:50 PM Re: Flood Insurance Vendor BOTO67
Dani York, CRCM Offline
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Dani York, CRCM
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Posts: 3,663
TN
What dates are they putting on those forceplaced policies? What type of policies are they (MPPP, private, etc)?

The 3 letter requirement at day 1, day 30, and day 45 is only required on MPPP policies (and the 30 day letter is optional). On private policies, you only have to send the day 1 letter to start your process. So depending on what type of policies your vendor is forceplacing with, you may or may not have an issue with your letters.

You need to have a forceplaced policy in place by day 46 after the initial letter goes out regardless of the type of policies you are forceplacing.

As far as your vendor never being criticized, well, they wouldn't be the ones who are criticized....the banks are the ones who are criticized. So technically they are telling the truth. However, it doesn't matter. Just because they haven't been criticized doesn't mean that they aren't violating the flood rules. It just means no one has told them....yet.
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I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

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#1597388 - 08/26/11 09:01 PM Re: Flood Insurance Vendor Dani York, CRCM
BOTO67 Offline
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Joined: Mar 2010
Posts: 15
Arkansas
It is a private policy. It appears that they backdate the policy to day 1 and the bank pays for the first 45 days of coverage.

Is that ok?

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#1597393 - 08/26/11 09:07 PM Re: Flood Insurance Vendor BOTO67
Dani York, CRCM Offline
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Dani York, CRCM
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TN
I bet I know who your vendor is......

Sounds like you have a gap policy that converts to a forceplace policy after 60 days (unless you notify them on day 46) and uses the original gap date for the forceplace policy. Is that right? If so, I think you will be ok since you are paying for the first 45 days worth of premium. Personally, I wouldn't use their letters though.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

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#1598174 - 08/30/11 04:31 PM Re: Flood Insurance Vendor Dani York, CRCM
Sugarbaker Offline
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Can someone please explain the MPPP. We plan on force-placing through a local agent, but I'm not sure if it is a private policy or through the MPPP - how can I tell?

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#1598212 - 08/30/11 05:22 PM Re: Flood Insurance Vendor Sugarbaker
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
You can read about the MPPP beginning on page 42 of the Mandatory Purchase Guidelines and the notification requirements in Appendix 7.

The declaration page under Policy Type should have FLD MPPP - General Property Form, or at least ours do.

I'm not aware of any WYOs that write private flood insurance. Private insurance is usually written by high risk companies such as Lloyds.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#1598862 - 08/31/11 08:14 PM Re: Flood Insurance Vendor Dan Persfull
Sugarbaker Offline
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Thanks.

It sounds like we would be going through a WYO company (Travelers)who is participating in the MPPP. We have never had to force-place a policy so I'm not sure if that is on the dec sheet.

My next question is how do we efficiently get rates to go into the notifications that we'll be sending since this is required when using MPPP policies? Do we use the rates that are listed in the flood manual under the MPPP section or do we try to get rates from the insurance company? If we have to go through the company, my concern is that it will take a while to get numerous quotes (this is a remapping so we have a lot of letter to send) and the letters won't go in a timely manner.

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#1599005 - 09/01/11 01:02 PM Re: Flood Insurance Vendor Sugarbaker
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
There is no requirement to quote rates and we don't quote them in the first 2 notices. A copy of the declaration page is included with the 3rd and final notice after the insurance has been placed.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#1599009 - 09/01/11 01:12 PM Re: Flood Insurance Vendor Dan Persfull
Sugarbaker Offline
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The 2011 flood manual, MPPP section (D)(2)(e)states that we must list the coverage amount and it's cost in our notification to the mortgagor. I hope I misread it because I think this will be difficult especially when dealing with numerous borrowers that need to be notified.

http://www.fema.gov/pdf/nfip/manual201110/content/10mppp.pdf

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#1599050 - 09/01/11 02:00 PM Re: Flood Insurance Vendor Sugarbaker
Dan Persfull Offline
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Dan Persfull
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Posts: 47,517
Bloomington, IN
The declaration page with the 3rd notice provides the required information of the coverage and its cost.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#1599062 - 09/01/11 02:18 PM Re: Flood Insurance Vendor Dan Persfull
Sugarbaker Offline
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Okay, so all the information doesn't have to be in the initial notice. That makes this remapping much more manageable. Thanks for the clarification. Also, I went back and looked at the 2007 manual - its MPPP section seems to provide a lot more detail in terms of sample language (unless I overlooked it in the new manual).

Dan, thanks for your help!

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#1599086 - 09/01/11 02:53 PM Re: Flood Insurance Vendor Sugarbaker
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#1600150 - 09/06/11 06:09 PM Re: Flood Insurance Vendor Dan Persfull
Sugarbaker Offline
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Joined: Nov 2005
Posts: 265
Another question:

Are we required to include the dollar amount of coverage in the initial remapping letter or can we just include the general amount of insurance required as stated in the regulation (i.e. The flood insurance purchased must cover the lesser of the outstanding principal balance of the loans secured by the property or the maximum amount of coverage allowed for the type of property under the NFIP.)?

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#1600155 - 09/06/11 06:14 PM Re: Flood Insurance Vendor Sugarbaker
Dani York, CRCM Offline
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Dani York, CRCM
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Posts: 3,663
TN
I would put the dollar amount of coverage you are requiring. If you just tell them the basic definition (lesser of a, b, or c), the customer would have to figure out how much coverage to buy and may purchase the wrong amount.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

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#1600158 - 09/06/11 06:17 PM Re: Flood Insurance Vendor Dani York, CRCM
Sugarbaker Offline
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Posts: 265
That's a good point. Thanks!

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#1708226 - 06/07/12 08:52 PM Re: Flood Insurance Vendor Sugarbaker
Ann Offline
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Joined: Jul 2001
Posts: 564
South Carolina
Does anyone have a good recommendation for a flood tracking vendor? PM me if you think this should be confidential. Thanks.

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