Posted By: GenerousLife
LOMA and Servicer Duties - 10/29/15 09:15 PM
We are in the midst of an internal deep dive audit of flood files and came across this interesting file:
A loan originated 9 years ago. The flood determination showed the subject property to be in a flood zone. Two years later, a LOMA was done (not at the request of our borrower, but some other unrelated party) which took the entire sub-division that our covered property is in, out of the flood zone. We were not notified by the borrower, nor our servicer.
We have inquired with the flood servicer and they did not know about the LOMA and they have updated their records for going forward.
The LOMA from FEMA states that FEMA only notifies the participating community and it is the community's responsibility to publish a notice informing borrowers, lenders and insurance agents. This could have happened, but this was in a west coast state and we are in the Midwest.
We did pay for Life of Loan monitoring for this loan. The servicer is not one of our standard flood vendors so there is not a written agreement that states what the servicer will do for the bank.
Question: Are Flood Servicers notified of LOMAs, or is that fine print disclosure in the FEMA documentation the actual procedure? The only notification being a Public Notice published by the participating community.
Question: What obligation does the bank have to refund five years of premiums? We feel it would be the right thing to do, but are trying to understand any regulatory obligation.
A loan originated 9 years ago. The flood determination showed the subject property to be in a flood zone. Two years later, a LOMA was done (not at the request of our borrower, but some other unrelated party) which took the entire sub-division that our covered property is in, out of the flood zone. We were not notified by the borrower, nor our servicer.
We have inquired with the flood servicer and they did not know about the LOMA and they have updated their records for going forward.
The LOMA from FEMA states that FEMA only notifies the participating community and it is the community's responsibility to publish a notice informing borrowers, lenders and insurance agents. This could have happened, but this was in a west coast state and we are in the Midwest.
We did pay for Life of Loan monitoring for this loan. The servicer is not one of our standard flood vendors so there is not a written agreement that states what the servicer will do for the bank.
Question: Are Flood Servicers notified of LOMAs, or is that fine print disclosure in the FEMA documentation the actual procedure? The only notification being a Public Notice published by the participating community.
Question: What obligation does the bank have to refund five years of premiums? We feel it would be the right thing to do, but are trying to understand any regulatory obligation.