The History of Insurance Tracking Compliance
This blog post provides an informative review of the history of insurance tracking compliance that was recently examined in Miniter’s webinar “RESPA Compliance Insurance Tracking Since Dodd-Frank” this February. Featured in this blog post are additional statements from Miniter Group Managers made during the webinar.
The webinar explored the significant compliance issues since the CFPB began updating RESPA and provided perspective on these examination findings from both compliance and operational standpoints. The panel discussed these issues in detail and explained how Miniter Group’s Borrower-CentricSM insurance tracking system monitors these changes.
1996 – CPI Model Act
Prior to this model act coming into place, there was not much regulatory guidance on creditor placed insurance. The CPI Model Act helped to promote the public welfare by:
- Regulating creditor placed insurance.
- Creating a legal framework within which creditor placed insurance may be written.
- Helping to maintain the relationship between creditors and insurers.
- Minimizing the possibilities of unfair competitive practices in the sale of creditor placed insurance.
During the webinar, Don Marthey stated, “The CPI Model Act was really aimed at CPI type loans, which are vehicles or anything with channel on them. Since there was no real guidance on the hazard side up until 2010, we also applied that model act to hazard for means of best practice.”
2010 – Dodd-Frank Wall Street Reform & Consumer Protection Act
This act targeted sectors of the financial system that were believed to have caused the 2008 financial crisis, including banks, mortgage lenders, and credit writing agencies. One major component of Dodd-Frank was the authorization of the Consumer Financial Protection Bureau, CFPB, which began operating in 2011.
Critics of Dodd-Frank argue that the regulations imposed may make US based financial firms less competitive than their foreign counterparts. In 2018, Congress passed a new law which rolled back some of Dodd-Franks restrictions.
When Miniter Group began developing their tracking system in 2006, there was no regulation around force-placed insurance with mortgage, only CPI insurance as mentioned in the CPI Model Act. Likewise, Miniter developed their tracking system around the CPI force-placed insurance and luckily, Dodd-Frank took those requirements over to the mortgage side.
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.
2013 – Additional Disclosures Due To Consent Order
In the spring of 2013, the New York Department of Financial Services and insurance companies stated multiple of the following consent orders:
A clear and conspicuous disclosure must be included in all notices provided to a borrower that a New York FPI Company or an affiliate is staffing the mortgage servicer’s telephones, if that is the case; &
A clear and conspicuous disclosure, which had to be approved by the NY DFS, must be included on the front of envelopes stating the mailing contains important homeowners’ insurance information.
These disclosures must be of such size, color, and/or contrast and is so presented as to be readily noticed and understood by the person to whom it is disclosed.
In addition to the disclosures, NY FPI companies were required to re-file with the DFS their force- placed hazard premium rates for any FPI hazard policy form having an Actual Loss Ratio of less than 40 percent for the preceding calendar year.
In 2013, Miniter Group had placed an order of 50,000 envelopes for the outbound notifications. When this consent order came out, Miniter had to send those back and have them reprinted with the red disclosure on the front.
Jim Gilpin, EVP & CEO of Miniter Group stated during the webinar, “We think it’s a good idea to use those envelopes across all 50 states, even though it’s required in only some states in the US.”
2014 – CFPB Amended Regulation X
This amendment addresses servicers’ obligations to correct errors asserted by mortgage loan borrowers; to provide certain information requested by such borrowers; and to provide protections to such borrowers in connection with force-placed insurance.
The amendment also modifies and streamlines certain existing servicing-related provisions of Regulation X.
For instance, this final rule revises provisions relating to mortgage servicers’ obligation to provide disclosures to borrowers in connection with transfers of mortgage servicing, and mortgage servicers’ obligation to manage escrow accounts, including restrictions on purchasing force-placed insurance for certain borrowers with escrow accounts and requirements to return amounts in an escrow account to a borrower upon payment in full of a mortgage loan.
By reviewing the history of compliance insurance tracking, loan servicers and compliance professionals will enhance their knowledge of RESPA implementations and the subsequent industry regulations. Additionally, bankers and lenders are encouraged to learn more about Miniter Group’s compliance expertise and its application in an insurance tracking system.
Watch the webinar “RESPA Compliance Insurance Tracking Since Dodd-Frank” today to learn why the Borrower-CentricSM business model makes Miniter Group one of the best insurance tracking providers in the industry.
June 24, 2021 (2:00PM EDT)
This webinar is a panel discussion that provides a deep dive into the complexities of commercial insurance tracking. Both collateral value determination and operational risks will be discussed. Topics include:
- Insurance tracking for multi-collateral and cross-collateral loans.
- Real property valuations, tracked values, and their uses to manage lender risk.
- GSE requirements for Commercial loans.
The panelists of the webinar include Michelle Austin, VP of Lender Services, Don Marthey, VP of Business Strategy and Tracking Operations, and Jim Gilpin, EVP and COO of Miniter Group.