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#309812 - 01/28/05 05:23 PM 208.25(j)
M Cockrell Offline
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208.25(j) states that "the bank shall notify the Director of FEMA (or the Director's designee) in writing of the identity of the servicer of the loan." The very next sentence stipulates the designee as the insurance provider. Does having the bank that services the loan named as the mortgagee in the policy sufficient to satisfy the requirement?
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#309813 - 01/28/05 05:53 PM Re: 208.25(j)
Dan Persfull Offline
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Not IMO. We provide the insurance provider (agent) with a copy of the SFH notice identifying the property and the zone with a cover memo that we will be the servicer and X amount of coverage is required.
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#309814 - 01/28/05 10:33 PM Re: 208.25(j)
GreatBlue Offline
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Dan, what about page 31 of the Mandatory Purchase Guidelines which state: "When a policy is first written, the agent fulfills the notice requirement [referring to the notice to the Director of FEMA's designee] by indicating on the policy application the name of the mortgagee who is to receive notices."
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#309815 - 01/28/05 10:50 PM Re: 208.25(j)
Dan Persfull Offline
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Jill, I have always interpreted that "the agent" refers to the agent representing the NFIP (NFIP Servicing Agent mentioned on page 30) and they satisfy their requirement to notify FEMA.
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#309816 - 01/28/05 10:55 PM Re: 208.25(j)
GreatBlue Offline
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Ok, thanks.
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#309817 - 01/29/05 12:15 AM Re: 208.25(j)
rlcarey Online
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From the OCC's Flood Disaster Protection Handbook:

"A lender must notify the director of FEMA, or the director's designee, of the identity of the loan servicer and of any change in the servicer. FEMA has designated the insurance carrier as its designee for this purpose. Notice of the identity of the servicer will enable the insurance carrier to notify the loan servicer 45 days before a flood insurance policy expires. Also, a notice of any change in the loan servicer must be sent to the insurance carrier within 60 days of the effective date of a servicing transfer. Although no standard notice form is required, the information provided should be sufficient to identify the security property and the loan, as well as the new servicer and the servicer’s address."
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#309818 - 02/01/05 03:30 PM Re: 208.25(j)
GreatBlue Offline
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I want to argue this point one more time. The 7/23/97 Interagency Q&A also has a question that addresses this. Here it is:

1. When a lender makes a designated loan and it will be servicing that loan, what are the requirements for notifying the Director of FEMA or the Director’s designee?

Answer: FEMA stated in a June 4, 1996 letter, that the Director’s designee is the insurance company issuing the flood insurance policy. The borrower’s purchase of a policy (or the lender’s forced placement of a policy), will constitute notice to FEMA when the lender is servicing that loan. [emphasis added] In the event the servicing is subsequently transferred to a new servicer, the lender must provide notice to the insurance company of the identity of the new servicer.

This Q&A seems to be addressing the responsibility of the lender specifically.
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#309819 - 02/01/05 04:38 PM Re: 208.25(j)
M Cockrell Offline
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could you fax/e-mail me a copy of this letter? or is there a website where you found it?

edit: never mind - found it under the FDIC's FIL-77-97
Last edited by M Cockrell; 02/01/05 05:19 PM.
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#309820 - 02/01/05 04:59 PM Re: 208.25(j)
Dan Persfull Offline
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Jill, there's really nothing to argue as far I'm concern - the insurance agent has to be notified by the servicer. How does the borrower know what zone, $ amount, how the loss payee is to be completed etc. if you do not give them that information either through the "special flood hazard area" notice or a memo to the agent? When "The borrower purchases the policy" there had to be some written information given from the bank either to the borrower (by virtue of the notice) to give the insurance agent or the agent directly, otherwise how would the agent know what to write.

Simply naming a bank as loss payee is not sufficient IMO to meet the "in writing" requirement. That's why I fall back on the notice to the borrower, or a cover memo to the agent (which we include in our notice).
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#309821 - 02/01/05 08:39 PM Re: 208.25(j)
GreatBlue Offline
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Ok, you're right. Somehow I was reading right over the section that said it had to be "written" notice.
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#309822 - 02/01/05 10:54 PM Re: 208.25(j)
M Cockrell Offline
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As the FDIC issued notice “FIL-77-97” (see link below) from their very own “mouth” (so’s to speak), and specifically as an FDIC regulated institution, can I not “hang my hat" on their very own statement:

“The borrower’s purchase of a policy (or the lender’s forced placement of a policy), WILL CONSTITUTE NOTICE TO FEMA when the lender is servicing that loan.” (emphasis mine)

Have they not provided an "out" to the "in writing" portion of the Reg?

http://www.fdic.gov/news/news/financial/1997/fil9777a.html (see Section IX, Question 1)
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#309823 - 02/02/05 01:47 PM Re: 208.25(j)
Dan Persfull Offline
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Quote:

The borrower’s purchase of a policy




If the notice was not provided to the borrower, with the zone identification, your name as creditor, and the dollar amount of coverage, how would the borrower know to purchase insurance?

Here's an exert from the Notice to Borrower of Special Flood Hazard Area that we use:

The attached form provides specific information regarding your particular flood zone determination and may be required by your insurance agent . Please contact me if I can be of any assistance regarding this notice.

IMO, what the FDIC is saying once you provide the notice to the borrower with the flood information, and the borrower then purchases the insurance you have fulfilled your notice requirement to FEMA.
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#309824 - 02/02/05 02:16 PM Re: 208.25(j)
M Cockrell Offline
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M Cockrell
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Dallas, TX
Now that makes perfectly good sense to me.

We notify the borrower & the borrower, in turn, notifies the insurance agent. Thus, providing notice from the FI to FEMA's Director's designee via the borrower.
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