Mortgage Impairment Insurance
All mortgage originators and mortgage servicers should purchase Mortgage Impairment Insurance. Mortgage Impairment Insurance coverage is required for all lenders that originate or service mortgages for Fannie Mae, Freddie Mac, Ginnie Mae, or the Federal Home Loan Banks. These Government Sponsored Enterprises (GSEs) have very specific requirements for MI and Mortgage E&O coverage.
Mortgage Impairment Insurance provides coverage for lenders. The policy has 3 main features:
- Property Insurance – This coverage requires default by the borrower and includes a wide range of perils (ie: earthquake). A lapse in the borrower’s insurance will trigger 90 days of coverage to allow lenders to re-establish primary layer insurance. Borrower insurance and force-placed insurance are examples of primary layer insurance.
- Liability Insurance – Loss exposures that are associated with servicing the mortgage. This coverage acts as E&O insurance for the loan servicing department.
- GSE Compliance – A properly underwritten mortgage impairment policy will utilize the liability insurance described above to meet GSE compliance requirements in the secondary market. This coverage is loosely named mortgage holders E&O insurance.
To learn more about mortgage impairment insurance, please read the posts below:
E&O Policy Requirements – protect both the servicer and the seller against claims of negligence for these servicing activities:
- Flood Determination
- Hazard and flood insurance tracking and maintenance
- Payment and tracking of real estate taxes
- Mortgage insurance or loan guaranty maintenance
E&O policy limits between ten and thirty million dollars are required based on aggregate coverage or on a per loan basis. Maximum deductibles from ten to fifteen percent of these limits are required based on the size of the portfolio.
For more detailed information visit: Fannie Mae Selling Guide Website
Miniter Group’s in-house underwriters are some of the best mortgage impairment insurance underwriters in the world. Our executive underwriter has been involved in mortgage impairment underwriting for over 30 years worldwide.
- Creating Mortage Impairment Policies with the use of over 40 custom endorsements.
- Underwriting using adequate insurance limits based on the makeup of your portfolio.
- Underwriting expertise to meet the liability compliance requirements of secondary market GSE’s.
We have created customized and cost-effective mortgage impairment forms for some of the largest banks in the USA.
Learn more about mortgage impairment, please read the posts below:
FEMA announced in early 2019 that the National Flood Insurance Program (NFIP) is redesigning the way NFIP policies are rated.
This memo serves to update Miniter’s position regarding our COVID-19 insurance tracking based on new guidance available from the April 27, 2020 OCC update, the Federal Reserve Q&A published May 6, 2020, and the May 7, 2019 FDIC Q&A (updated).
This guide provides the lender with a detailed overview of Force-Placed Insurance. Discussions include features & benefits, history of force-placed insurance, the lender-placed insurance policy, issues with the current force-placed insurance business model and the new Borrower-Centric insurance tracking module along with compliance and vendor management. This is a must-read for any lender using force-placed insurance.
Mortgage Impairment Insurance is a critical component of a lender’s collateral risk transfer strategy. Mortgage Impairment not only covers uninsured physical damage, but it provides errors & omissions coverage for loan servicing that is required by secondary markets. This guide will provide the insight that a lender needs to understand mortgage impairment insurance.
After extensive study of these rules, this white paper will define 9 steps that servicers need to implement to comply with Regulation X (RESPA) concerning lender-placed insurance.
The Joint Agency’s Final Rule is the latest guidance for Force Placed Flood Insurance. This article answers the most common Final Rule question regarding force place flood insurance procedures. In addition to answering frequently asked questions, we share some key insights from our experience as an outsource insurance tracking vendor.