We are located in Northern California, where the recent fires have impacted our community significantly. I've been asked how to handle mortgage loans in process where the collateral is still intact, but the borrower is having difficulty obtaining hazard insurance. While hazard is not a regulatory requirement, borrowers do sign an agreement to obtain and maintain insurance as a requirement of the loan. If we've already approved the loan, but now we learn that the borrower can't get insurance, do we just Adverse at that point?
We do have FDIC coming in next week for Safety and Soundness, and they've already signaled their interest in looking at what we're doing with regard to the fires, so we plan to discuss this issue with them as well, but I wanted some feedback from a regulatory compliance perspective.
Be kind; everyone you meet is fighting a hard battle.
--all opinions are my own--