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#1800323 - 04/02/13 01:08 PM Re: interagency guidance issued on Biggert Waters..but Burgess
RR Joker Offline
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Thanks Randy..I know I'm overthinking this...it's the letter, or re-working of the letter and procedures that's twisting me up somehow...trying to make it make sense! cry
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#1800328 - 04/02/13 01:13 PM Re: interagency guidance issued on Biggert Waters..but Burgess
RR Joker Offline
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Dan, I agree with your analogy of when the policy lapses, and it's been a long-standing issue that we have had 15 days of gap with the way the old rules were written.

Before we had to wait until day 46 to FP. Now, we could FP on day 30, but not add the premium to the loan until day 46, and refund if proof is otherwise given.

May be more trouble than it's worth, actually!
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#1800425 - 04/02/13 02:58 PM Re: interagency guidance issued on Biggert Waters..but Burgess
YosemiteSamIAm Offline
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O.K., now that that is settled, I'm resubmitting this question for consideration please:

I saw the FIL that was released last week and had a question.

This FIL pointed out two things. 1) That certain pieces of the Act became effective upon enactment and 2) the other provisions are not effective until regulations are issued. One of these sections has to do with flood insurance escrow for residential property effective for all outstanding and new loans as of 7-6-14. Have you heard any discussion as to whether this will mean we have to have a fully funded escrow account by that date or if it means that we just will need to have established an escrow account and begin the process of getting it properly funded?
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#1800429 - 04/02/13 03:03 PM Re: interagency guidance issued on Biggert Waters..but Burgess
RR Joker Offline
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Yo, I don't think your question can really be answered until they put that part into regulation.
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#1800508 - 04/02/13 05:08 PM Re: interagency guidance issued on Biggert Waters..but Burgess
YosemiteSamIAm Offline
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Understood RR, I was just wondering if there was any industry or regulator "buzz" out there? grin
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#1800510 - 04/02/13 05:15 PM Re: interagency guidance issued on Biggert Waters..but Burgess
rlcarey Offline
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However it works out, it is not going to force an escrow on a borrower that doesn't already have one. So, from that perspective, it will be on a go forward basis. If they already have an escrow, flood has to already be included.
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#1800657 - 04/02/13 08:09 PM Re: interagency guidance issued on Biggert Waters..but Burgess
John Burnett Offline
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Well the wording of the B-W provision in section 100209(b) indicates it will apply to all mortgage loans requiring flood insurance that are outstanding on, or entered into on or after [July 6, 2014]. I know that regulators are trying to get some parts of B-W clarified (there's more wrong than Congress patched up with the amendment restricting escrow to non-business loans). I wonder whether they'll ask for the "outstanding on" language to be removed, regulate an exception to it, or make servicers add the escrow for those who don't already have it.
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#1801143 - 04/03/13 08:05 PM Re: interagency guidance issued on Biggert Waters..but Burgess
ahkcompliance Offline
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So if we have a customer on July 6, 2014 who has an escrow set up for taxes and insurance and also has flood insurance. The flood insurance is paid annually by the borrower and is not included in the escrow. Will the flood ins need to be included in the escrow account?

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#1801147 - 04/03/13 08:07 PM Re: interagency guidance issued on Biggert Waters..but Burgess
RR Joker Offline
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It's already required to be escrowed if you escrow for anything else.
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#1801156 - 04/03/13 08:20 PM Re: interagency guidance issued on Biggert Waters..but Burgess
ahkcompliance Offline
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That is what I thought.

I have discovered two loans that have escrow for taxes but NOT flood insurance. One loan was done in 2005 and the other in 2010. Do we have to go back and escrow for flood?
Last edited by ahkcompliance; 04/03/13 08:30 PM.
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#1801476 - 04/04/13 04:18 PM Re: interagency guidance issued on Biggert Waters..but rlcarey
zitch70 Offline
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We just had a customer present us with 4 years worth of flood insurance and wants a refund of the 4 years of forced place insurance premiums that we added to the loan. Does this go retroactive or just current policy period? Plus we will verify with ins company that the customer did not just get a policy then drop coverage and keep the Declarations page.
Last edited by zitch70; 04/04/13 04:21 PM.
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#1801509 - 04/04/13 04:47 PM Re: interagency guidance issued on Biggert Waters..but Burgess
rlcarey Offline
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Current policy - sure. Policies paid for and already expired - ask them where were they four years ago when you were sending them force place notices and copies of force placed policies. They are a little late to the game in my book.
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#1802666 - 04/09/13 02:15 PM Re: interagency guidance issued on Biggert Waters..but Burgess
Ucan'tdothat Offline
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Some years ago we had a big issue during an exam because when we force placed, we retroactively applied the coverage to the date of expiration of the previous coverage and charged the borrower. The OCC said that we could force place but could not charge the customer for the 45 days. We changed our procedures and now forceplace on the 46th day. The bank bought gap insurance to protect itself for the first 45 days.

My question is that the new guidance says we MAY charge now beginning on the date the existing coverage but this does not mean we MUST do it. Correct? I think we can just continue to do what I describe above?

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#1802673 - 04/09/13 02:27 PM Re: interagency guidance issued on Biggert Waters..but Burgess
rlcarey Offline
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I think we can just continue to do what I describe above?

Yes you can.
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#1802901 - 04/09/13 07:02 PM Re: interagency guidance issued on Biggert Waters..but Burgess
Cale_N_Oats Offline
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Our Senior Lending Officer just came from a conference held by the FDIC during which the speaker, who is an examiner, stated that the 45 day rule no longer applies and thatwe are able to force place and charge our customers after the 30 day grace period. I have read through the above comments and don't see that interpretation in any of them, so i just wanted to ask can we force place and charge the customers or do we still have to wait 45 days before they are charged?
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#1802908 - 04/09/13 07:13 PM Re: interagency guidance issued on Biggert Waters..but Burgess
rlcarey Offline
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I think this was fully discussed in this post - did you go to the beginning - there are more than one page of posts.
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#1802979 - 04/09/13 08:03 PM Re: interagency guidance issued on Biggert Waters..but Burgess
Cale_N_Oats Offline
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Yeah I read all the pages. The examiner I mentioned in my first post says after 30 days you can force place and charge the customer for the full amount same day. I guess I am confused as to whether you can charge them for only the 15 days of lapsed coverage or for the full amount of the insurance?
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#1802981 - 04/09/13 08:06 PM Re: interagency guidance issued on Biggert Waters..but Burgess
rlcarey Offline
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That is the discussion that Dan and I were having. Dan indicated that the bank was covered for 30 days after expiration (different than if the borrower canceled their policy) and he thought you could force place and charge from day 31. I think that you might be able to go back to day one, but I guess we will wait to see if there clarified from other than some examiner in a seminar. Going back to day 31 is a safe bet in either case under the new law and interpretations.
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#1802983 - 04/09/13 08:11 PM Re: interagency guidance issued on Biggert Waters..but Burgess
RR Joker Offline
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If I'm understanding Cale's question correctly, he's asking if you can go ahead and charge on day 31. My understanding is you can make the insurance effective beginning day 31, but you can't apply it to the balance until day 46.
Last edited by RR Joker; 04/09/13 08:11 PM. Reason: edited for clarity
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#1802988 - 04/09/13 08:15 PM Re: interagency guidance issued on Biggert Waters..but Burgess
rlcarey Offline
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Oh - OK. That would then seem to be the case. Sorry - either not enough or tooo much coffee - not sure which it is smile All I know is that it is rapidly approaching martini hour.
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#1802991 - 04/09/13 08:17 PM Re: interagency guidance issued on Biggert Waters..but Burgess
RR Joker Offline
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I hear ya!
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#1803000 - 04/09/13 08:27 PM Re: interagency guidance issued on Biggert Waters..but Burgess
Cale_N_Oats Offline
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Sorry for the confusion. Yes, RR that is what I was trying to get clarification on because the guidance mentions charging the customer "fees" and "premiums", but was confused on when it could be applied. Thanks to you both!
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#1803009 - 04/09/13 08:37 PM Re: interagency guidance issued on Biggert Waters..but Burgess
Queen Mum Offline
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OK
But didn't it also say that if they supplied you with evidence of insurance within 30 days then you couldn't charge them anything but if they didn't get insurance in the first 30 days that you could?

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#1803018 - 04/09/13 08:47 PM Re: interagency guidance issued on Biggert Waters..but Burgess
Cale_N_Oats Offline
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That is what I was thinking too QM.......
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#1803040 - 04/09/13 09:18 PM Re: interagency guidance issued on Biggert Waters..but Burgess
rlcarey Offline
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What they said was:

Require the lender or servicer, within 30 days of receiving a confirmation of a borrower’s existing flood insurance coverage, to terminate any force-placed insurance and refund to the borrower all force-placed insurance premiums and any related fees paid for by the borrower during any period of overlap between the borrower’s policy and the force-placed policy.

That should be no different than what is happening now. You can't double insure the borrower.

Many banks use force placed insurance which allows them to retroactively cancel insurance back to the date that the borrower coverage started and receive an appropriately prorated refund.
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