Skip to content
GeoDataVision
Thread Options
#2068807 - 03/11/16 10:38 PM Application premium vs. Issued policy premium
Ninky Offline
Gold Star
Ninky
Joined: Nov 2002
Posts: 357
We are new to escrow due to Biggert Waters. We have closed two flood escrow loans and in both transactions new policies were issued. Borrower paid premium on application before closing. When we received the issued policy, in both instances, the premiums are $40-$50 lower than the borrower paid on the application. This throws the escrows off. Is this standard procedure, or do the application premium and the issued policy premium in most transactions match? We have our procedures in place, but this was unexpected and is requiring a revised CD to the borrower. Do most lenders wait until receipt of the issued policy to close? That can cause significant delays. Or was this just a fluke?

Return to Top
Flood Compliance
#2068810 - 03/11/16 11:09 PM Re: Application premium vs. Issued policy premium Ninky
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Most lenders do not wait until the policy is issued to close. Most policies arrive weeks after closing. I've never heard of the premium issue you mention. It will be interesting to see what others have to say.

Have you contacted the agent(s) to see why this is?
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#2068999 - 03/14/16 07:25 PM Re: Application premium vs. Issued policy premium Ninky
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,962
Bloomington, IN
I agree with David. Check with the agent. This $40-50 could be a one time application fee charged by the agent.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2069039 - 03/14/16 08:52 PM Re: Application premium vs. Issued policy premium Ninky
Ninky Offline
Gold Star
Ninky
Joined: Nov 2002
Posts: 357
Yes. She said she did not know why it was issued at a lesser premium. (Possible error on the agent's part?) She did confirm that the refund was sent to the borrower. Would we get hit with an escrow violation for "over escrowing" if we did not make the CD correction and kept the set up for escrows with the higher (by $4) escrow cushion and monthly payment?

Return to Top
#2069057 - 03/14/16 09:51 PM Re: Application premium vs. Issued policy premium Ninky
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
No. This premium change occurred after the escrow account was established. You set up the escrow account based on the best info. You do not need to make mid-year changes. At the end of the year, you do an analysis and the surplus (if any) will be adjusted at that time.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#2069380 - 03/15/16 08:23 PM Re: Application premium vs. Issued policy premium Ninky
Ninky Offline
Gold Star
Ninky
Joined: Nov 2002
Posts: 357
Unfortunately, we received the issued policy after the CD had been provided to the customer. The coverage was confirmed, but no one noticed the variance in the premium until after closing. We sent a corrected CD and provided the small refund to the borrower. The good thing was that the initial escrow disclosure had not been sent, so we were able to provide an accurate initial Escrow Discl. Did we overcomplicate this? Should we have just left it alone until, as you mentioned, year end analysis to identify any overage?

Return to Top
#2069385 - 03/15/16 08:32 PM Re: Application premium vs. Issued policy premium Ninky
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I would have left it alone and adjusted it later, but I think it's okay that you took care of it now.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top