Quarter Four Newsletter, 2020
Welcome to our latest newsletter! We hope our quarterly newsletters help to keep you updated on our most recent news and provide you with valuable industry information. Our goal is to provide great content including detailed insight for loan officers, compliance officers, and loan servicing professionals who use our products and systems every day.
Miniter Group’s Q4, 2020 Newsletter contains informative articles on the following features:
- Staff Highlight: Don Marthey
- COVID-19 & Force-Placed Insurance
- General Industry Section: Potential Recession on the Horizon?
- Compliance Corner: Risk Rating 2.0 & Flood Webinar
- Rockland Holiday Magic Fundraiser
Staff Highlight: Don Marthey
Don joined Miniter as a VP of Sales in 2019 and helped contract lenders in the western states, including Alaska and Hawaii. Earlier this year, Don was called upon to transition to operations and assist with the dynamic growth of the tracking operation.
Julianne Donley, President & CEO of Miniter Group, commented today:
“The management team at Miniter Group is excited to have Don join our Borrower-CentricSM insurance tracking operation. Don’s expertise in large-scale insurance tracking operations will enable us to continue to improve the borrower experience of our lender’s customers.”
Don began his career as Operations Section Manager at National City Bank, where he managed a customer service team. He then moved to the American Modern Insurance Group, where he spent the next 21 years. During this time, Don took on roles with increasing responsibility, culminating in a position as Strategic Planning Director overseeing tracking operations for 5 million loans. Before joining Miniter Group, Don was the Director of Operations for Seattle Specialty. Don’s background will help Miniter service larger, more sophisticated lenders.
Covid-19 & Force-placed Insurance
As Covid-19 lingers, commercial-property foreclosures are expected to increase in the coming year. Hotels, restaurants, and shopping malls are most susceptible in this current environment, but even some apartment buildings and office buildings are expected to foreclose as the economy struggles to keep up with the effects of the pandemic.
Vacancy rates in both the retail and industrial real estate sector more than doubled in the first half of 2020.
There was a spike in force-placed insurance placements after the reinstatement of insurance policy cancellation clauses. These clauses suspended policy cancellations for 90 days during the second quarter of 2020. The borrowers that were unable to renew their insurance after the 90–day suspension were being force-placed during the third quarter of 2020.
As a result, the banking and insurance industries are handling a greater volume of force-placements due to the lapses that occurred earlier in the year.
- According to the Mortgage Bankers Association, commercial and multifamily mortgage loan originations were 48 percent lower compared to a year ago.
- More than 8,000 retail locations have gone out of business for good.
- “Commercial real estate borrowing and lending slowed dramatically in the second quarter, as uncertainty around the COVID-19 pandemic caused both borrowers and lenders to focus more of their attention on their existing books of business instead of new opportunities,” according to Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “
- Still, foreclosures remain an exception. Banks, which are getting plenty of leeway from regulators, have been more willing to grant long forbearance periods and extend them if necessary. Many nonbank lenders, such as private-equity funds and commercial mortgage-backed securities lenders, are more eager to foreclose, but often lack the staff to handle all the troubled properties.
General Industry Section: Potential Recession on the Horizon?
Much remains uncertain about COVID-19 and its ultimate impact on the U.S. economy and the housing market in 2021. Currently, we are seeing high levels of both consumer loan originations while at the same time seeing an increase in force-placements.
We observed the same phenomenon in both 2000 prior to 9/11, and in 2007 prior to the real estate market crash. In both these cases, we observed high consumer loan originations and force–placements before a recession. It is not set-in stone that there will be another recession in 2021, but as these similar patterns have now appeared, we will keep a close eye on the U.S. economy.
Direct quote from industry expert:
“The impact of the lender placed business will be higher penetration rates – we expect to see 20-30% premium growth in lender placed next year. There will be little impact on loan volumes and a consistency on the loss numbers.”
Compliance Corner: Risk Rating 2.0 & Flood Webinar
Miniter Group wrapped up the month of October with a Flood Compliance webinar hosted by Robert Hayden, Miniter’s new Compliance Risk Manager. Robert reviewed the history of Force-Placed Flood Insurance regulation starting with the passage of BW-12, HFFIA, Escrow Requirements, the 2015 Joint Agency Q&A interpretation, and finally Private Flood Insurance.
In October of 2021, FEMA will be implementing Risk Rating 2.0. This will fundamentally change the way flood risks are rated and will be the first time FEMA has updated their flood risk rating in over fifty years. FEMA will be using data from several different sources to develop these new ratings.
There are many unanswered questions that will have to be addressed before Risk Rating 2.0 rolls out, given that will impact all stakeholders in the flood insurance industry and takes on the integration of new technology. To provide homeowners and agents with some insight on what to expect for next fall, here’s what we know about Risk Rating 2.0, how it’s expected to transform NFIP flood insurance policies.
The change to the NFIP program ensures that the new risk rate methodology is programmed to take into consideration each property’s unique factors. This flood risk formula will reflect a more accurate calculation to improve rate transparency for insurance agents and policyholders. Risk Rating 2.0 will ultimately provide a better understanding for the individual risk associated with each property and what insurance coverage will be the best fit.
Rockland Holiday Magic Fundraiser
For many years Miniter Group has had the joy of donating toys to the non-profit charity organization, Rockland Holiday Magic. Rockland Holiday Magic donates Christmas gifts to families in need during the holiday season.
However, the fundraising and distribution will be different this year due to the pandemic. In an effort to keep volunteers and families safe from unnecessary risk of exposure, Rockland Holiday Magic is accepting monetary donations which will be disbursed as gift cards to the parents and guardians of the children they offer help to.
To make this year’s charitable event a little more cheerful, Miniter has decided to host a fundraiser raffle for Apple Airpods. To enter the raffle, you must donate a minimum of $5 using the PayPal link. 100% of the proceeds will go to Rockland Holiday Magic, and the raffle winner will receive their prize in time for Christmas!