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#2078182 - 05/11/16 06:39 PM
borrower has escrow-won't communicate new carrier
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Diamond Poster
Joined: Jul 2010
Posts: 1,115
The Great White North
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Situation where the borrower has escrow set up for homeowners insurance. We have recently found out, when trying to pay the bill, that the borrower no longer has their insurance with that company. Numerous attempts have been made to obtain the new carrier information but the borrower is not returning phone calls, following up on letters sent, etc. Do we just keep trying to communicate with the borrower and let it be? I am at a loss for the next step. We can't force place, in my opinion, as the only two reasons we can force place if there is an escrow account is if we have a reasonable basis to believe that the insurance is being canceled for reasons other than nonpayment or the property is vacant. The current insurance carrier mentioned that the borrower canceled the policy but we don't know if he obtained new insurance, but why wouldn't they have, they are paying in an escrow account. I would assume there is coverage in place. Or perhaps they did not obtain insurance, but then I can't reasonably believe that the insurance was canceled for reasons other than nonpayment. They didn't pay it.
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#2078192 - 05/11/16 06:58 PM
Re: borrower has escrow-won't communicate new carrier
Bec
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Diamond Poster
Joined: Jul 2010
Posts: 1,115
The Great White North
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Great point by you for sure. Payments have been coming in timely, no red flags there. (apparently this situation began from March of 2015, yeah, don't get me started). just to be clear though, force placement is not an option correct?
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#2078266 - 05/11/16 10:21 PM
Re: borrower has escrow-won't communicate new carrier
Bec
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Power Poster
Joined: Jun 2003
Posts: 7,650
Florida
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I'm not Dave, but if the borrower cannot (or will not) prove they have insurance, force placing is an option.
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#2078351 - 05/12/16 03:57 PM
Re: borrower has escrow-won't communicate new carrier
Bec
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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The threat of force placement may just be the only way to apply the proverbial 2 x 4 to the borrower's backside and get the coverage documentation you have been asking for. Or you will find out that, in fact, the borrower has been trying to save a buck by letting his coverage lapse.
People stop talking to their lenders for some pretty strange reasons. But most of them revolve around financial problems, real or imaginary.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#2078391 - 05/12/16 05:35 PM
Re: borrower has escrow-won't communicate new carrier
Bec
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Diamond Poster
Joined: Jul 2010
Posts: 1,115
The Great White North
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So I took Dave's advice and told the relationship manager to contact the customer and give them option A proof of homeowners or Option B the loan is called. Remarkably the borrower talked to the RM and told him that they do have homeowners, the agent never sent us the information and he currently pays via EFT now. Amazing how one has to obtain information these days. Still not sure why the borrower went radio silent, but my guess is that he was ignoring the servicing dept and they didn't escalate it to the RM. Anywho...the borrower now wants to have homeowners insurance waived, I am not sure how one handles a post consummation homeowners insurance escrow waiving situation. Servicing want to cut a check for what has accrued in the escrow account which makes sense as we can't leave it in there. But something seems off with this? Is this allowed?
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#2078395 - 05/12/16 05:47 PM
Re: borrower has escrow-won't communicate new carrier
Bec
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Joined: Oct 2000
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Cape Cod
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If the escrow is not mandatory (thing HPML), it can be canceled, or the HI portion can be canceled and the tax portion continued, if that's the case. If the tax escrow will be continued, you will have to run a short-year escrow analysis with only those disbursements that will be made (taxes) in the next 12 months, and base your refund on the results of the analysis. If you will allow the entire escrow arrangement to be canceled, you will first send a notice of escrow cancellation as required by 1026.20(e) -- https://www.bankersonline.com/regulations/12-1026-020#20e -- at least three days before you actually close the escrow account and remit the balance.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#2078397 - 05/12/16 05:50 PM
Re: borrower has escrow-won't communicate new carrier
Bec
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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If the loan is an HPML, it will have a mandatory tax escrow period of either one year (old rules) or five years (current rules), and the escrow cannot be canceled ithin those periods. If those periods have passed (as they will have on all one-year escrow HPMLs), you have to ensure that the loan status meets the requirements of the regulation before cancelling the escrow payment.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#2078407 - 05/12/16 06:26 PM
Re: borrower has escrow-won't communicate new carrier
Bec
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Diamond Poster
Joined: Jul 2010
Posts: 1,115
The Great White North
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Excellent advice, thank you so much.
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