Our employee that handled Escrow just resigned and we are discovering and trying to correct several issues. Our biggest issue is the following...
-A fixed rate loan sold into the secondary market, that we retain servicing on.
-The loan had escrow for both taxes and insurance.
-The loan has been significantly past due over the past 2 years. We are in the process of foreclosure on the loan, but that has been a slow process due to Covid and an attorney that is very slow to respond.
-The escrowed taxes have been paid as they should, but we just discovered that the former employee did not pay the escrowed hazard insurance in 2021 or 2022. The loan was over 100 days past due in 2021 when the insurance would have been due, but the employee did not pay the premium, did not send any notices and did not force-place insurance.
The customer's insurance was obviously cancelled due to non-payment so we cannot reinstate that policy.
Can we send the 45 & 15 day notices now and force-place coverage? Can we force-place coverage only covering the balance of the loan, or since the hazard insurance was originally escrowed, would we need to have enough coverage to protect the customer's interest as well?
Can the force-placed insurance premium be applied against the existing escrow account? (The escrow account is negative, but that would at least allow for better tracking)