subject: How can Mortgage Loan Servicers Prepare for Disasters? [print this page] How can Mortgage Loan Servicers Prepare for Disasters?
Each season poses different challenges to a mortgage servicer.
For mortgage servicers, an important key to preparing for these potential disasters is fine-tuning service level agreements with the vendors who provide insurance tracking and coverage services, pursue hazard claim recovery services when losses occur, or provide preservation and protection activities. It is also important to ensure that internal policies and procedures are current and reviewed with your staff.
Hurricane losses may be covered by wind, flood or hazard policies, or a combination of these. Is this information being adequately tracked? Are the borrowers' policies being renewed, or are new policies being lender-placed? Servicers need to seek assurances that inspection companies have the means to inspect vacant homes, board broken doors and windows, and tarp damaged roofs in a timely manner. Loss Draft departments need to be adequately staffed to handle the influx of insurance checks that need to be endorsed and repairs that need to be tracked. Repairs and rebuilds can be delayed if servicers cannot quickly disburse funds from escrow accounts to homeowners wanting to pay their contractors.
Servicers' advance preparedness can positively impact future homeowner losses and subsequent repairs.
Wildfire seasons resulted in thousands of homes burning in several western states over the last several years. This exposed a wide-spread problem of under-insurance. Many homeowners mistakenly relied on their carrier to accurately set policy limits that did not reflect changes in the value of their personal property, additions and add-ons, building codes and reconstruction costs. To date, a high percentage of homes have never been rebuilt because homeowners had insufficient coverage. It is necessary to review insuring requirements with lender-placed carriers.
Winter in the northern states brings the threat of frozen pipes in vacant properties. Most carriers have coverage exclusions for frozen plumbing when properties are not adequately winterized. Lender- placed carriers are beginning to deny ensuing water damage when frozen pipes occur. As a result, preservation companies must winterize properties immediately upon vacancy confirmation. Most investors and mortgage insurers require servicers to preserve and protect vacant properties and will certainly review property maintenance records to ensure, at a minimum, that proper winterization is performed.
Servicers should be confident that should a large scale disaster occur, their hazard claims recovery partner is prepared to review, file and manage a high volume of claims in a short period of time. It is a good idea to proactively discuss this with your partners to determine their level of preparation and ability to handle sudden and large spikes in damaged property referrals.
It is also likely that each borrower's policy will be different than the next. Therefore, it is best if your hazard recovery partner is extremely well-versed in policy interpretation and coverage assessment and qualified and licensed to represent and assist homeowners as well as mortgagees.
Compliant and competent partners are also helpful when a disaster hits. Servicers should ensure their partners employ qualified, licensed experts in hazard claims that hold up to the level of regulatory scrutiny that followed Hurricane Katrina.
Having a partner that understands and complies with all the various nuances and regulations in each state will ensure the servicer is protected from improper claims management while providing the best solution to protecting and mitigating their risk.
Is your team ready for hurricane, wildfires and winter season disasters? Are your partners experienced, knowledgeable and able to ramp up their teams and subcontractors to handle sudden, unexpected spikes in claims activity? Now is the time to take a few moments to prepare for the expected "unexpected".
About Quality Claims Management
Quality Claims Management Corporation provides hazard claim recovery services to investors, mortgage servicers, homeowners and businesses. All claims are adjusted by licensed insurance professionals for an equitable settlement and accelerated resolution timelines.
QCMC's core focus is unparalleled expertise in policy coverage and thetechnical aspects of mortgagee and homeowner claims. QCMC has worked with homeowners and businesses including those affected by catastrophic natural disasters such as the 2003 and 2007 Southern California Wildfires, and Hurricanes Katrina, Rita and Wilma.
