Can you guys tell me how many of you have a contract with the company that provides your flood certifications? We have been using the same service provider for years and years and the issue has come up whether we should have a contract with them, but some in management feel that we should leave it "as is". I was curious what others are doing.


Thanks!

If you don't have a contract, and they make a mistake in a FZD, are you covered under their errors and ommission insurance?

It says so on the front of the flood determination. Up to $2,000,000. ? I guess that I am of the mind that wherever there is room for a lawsuit with a service provider then there should be a contract. Just my opinion.

Our FZD forms do not have that stated on them, you may have an "implied contract", however I agree with you that you should have a signed contract just in case of any possible dispute or litigation.

there is an additional twist to this.

We have a contract and an examiner commented that the "exclusive provider" clause can be a RESPA violation if they give us anything of value for it, such as a portfolio review. (Also applies to tax service contracts.) So, get a contract but take out the exclusivity clause and you will be in great shape.

Very good point. We recently changed to a new FZD company and did not allow them to do a (free or reduced fee) portfolio review to bring our current loans into the realm. We are relying on our LOL coverage from the previous company and as we refinance the existing loans we are obtaining new FZDs from the new company.

As long as you not receiving anything of value from the company - there would be no reason to delete the exclusivity clause. Even HUD is headed in that direction by proposing to allow packaging. Depending on what information you are providing to the FHD company - if any could be considered non-public information, you would need a privacy clause in a contract. Likewise, I would suggest a formal contract to cover the liability issues.

Don't you also need a contract to confirm that they guarantee the accuracy of the data? I don't think that their $2,000,000 error coverage would fulfill that requirement.

I would want a contract to ensure the confidentiality of information that the flood determination vendor might recieve. I think privacy and safeguarding of consumer informtaion would make we want to get a contract!

Thanks for all of your input, these are good points to address with upper management in making this decision.

Contract - good.
Exclusivity - not good.
Privacy and Security of Customer Data - essential.

This might interest you. PCi Corp. is hosting a free web seminar on this subject and addresses contracts and what is or isn't considered a RESPA violation. I participated in one a month or so ago and I thought it provided some good information. Anyhow, there website is www.pciwiz.com if anyone's interested.

The opinions expressed are mine and do not neccesarily reflect those of my employer.

Catrina: I went to the web site you suggested but couldn't find any info on the web seminar. Can you provide more specific info on where I can look? Thanks.

It's under the events tab - web events - it's in November

Thanks. Now I found it.