Understanding current regulatory trends is key to ensuring your portfolios and insurance strategy remain compliant while meeting your borrowers’ needs. However, the myriad regulations and requirements involving property insurance are evolving so quickly that it can be difficult to keep up.
Ignoring this changing landscape is a certain recipe for disaster. To help you understand what’s going on, we’ve outlined three major regulatory trends that could impact your business in 2022.
Federal scrutiny of servicers is growing
You should be aware that CFPB—as well as other federal agencies that regulate the mortgage industry—will be paying close attention to servicers in 2022 and are intent upon eliminating bad actors.
After granting the industry some leeway to address homeowners impacted by the Covid-19 pandemic, several federal regulators last month jointly announced they will ramp up enforcement activities. That means servicers should make sure they are in full compliance with Regulation X of the Real Estate Settlement Procedures Act, which establishes standards and certain timelines that servicers must meet when ordering lender-placed insurance for their borrowers.
New state laws may be on the way
Lender-placed insurance is also regulated on the state level. And last month, the National Association of Insurance Commissioners formally adopted the Real Property Lender-Placed Insurance Model Act, which sets a legal framework for states to use for regulating lender-placed insurance.
The NAIC’s efforts have been eight years in the making and were prompted by many high-profile reports of unfair competition in the lender-placed insurance industry. The model legislation prohibits certain practices when selling, placing and negotiating lender-placed insurance and is intended to maintain separation between lenders and servicers and insurers. Among other things, it covers the duration of lender-placed insurance coverage and how premiums should be calculated.
NFIP reform may be coming, too
You may have heard that Congress last month reauthorized the National Flood Insurance Program until February as part of its budget to prevent a government shutdown. That’s obviously good news. But there are also multiple bipartisan efforts on Capitol Hill to reform NFIP that could have a long-lasting impact on flood coverage.
Several NFIP reform bills have been introduced over the past several months. A U.S. House bill, the NFIP Reauthorization and Reform Act of 2021, would cap premium increases at 9%, create an affordability program to ensure coverage for low- and middle-income families, and authorize $500 million annually for FEMA to modernize its flood mapping program. Florida Sen. Rick Scott has also authored three NFIP reform bills, one of which addresses rate increases that are believed to unfairly impact borrowers in coastal states.
It should be noted that flooding has become the most frequent and expensive of U.S. natural disasters. Since 2000, flood-related disasters have caused more than $850 billion in damages and losses, according to Pew Charitable Trusts, which is also advocating for NFIP reform.
There’s little doubt that the regulatory environment impacting property insurance will change over the coming year. That’s why it’s so important to have a trusted insurance partner at your side that not only ensures you stay compliant, but can help you see what lies ahead and help you adjust your coverage as needed.
If you need help with lender-placed insurance, flood coverage, or anything else, please let us know. Just reach out to us at 866-300-7020 or info@ILgroup.com.
Famed science fiction author Arthur C. Clarke once wrote that while humans can show mercy, “against the laws of nature, there is no appeal.” Recently, we’ve all learned how very true that is.
There’s no doubt that natural disasters in the U.S. are increasing in number and scope, and it’s having a particular impact on how mortgage companies treat their portfolios. When thinking about protecting your portfolios from the impacts of natural disasters, here are three things to keep in mind.
1. We’re in unchartered territory.
The National Oceanic and Atmospheric Administration (NOAA) recently reported the average number of natural disasters causing more than $1 billion in losses has been 7.1 over the past 20 years. But over the past five years, the average has more than doubled to 16.2 events. So far this year, there have been 18 disasters with losses over $1 billion.
Most of the damage caused by natural disasters isn’t caused by the actual event itself, but by what happens afterwards. The flooding and storm surges that follow hurricanes, for example, can cause long-term property damage that might be excluded from a homeowner’s insurance policy.
Another factor contributing to the devastation caused by natural disasters is migration patterns. Even before the pandemic, many Americans were moving inland from the West and Northeast to areas where they could get more home for their money. However, many of these destinations are more prone to disasters, such as fires in rural areas in the West and tropical storms in the Gulf states.
2. Lack of coverage is a real problem.
Natural disasters are not only increasing the costs of insurance, but also revealing how few homeowners are properly protected.
According to a survey of homeowners conducted by the NAIC’s Center for Insurance Policy and Research, 56% of homeowners believed their homeowners policy would cover a flood, even though floods are not covered under standard policies.
The survey also found that homeowners living in the Pacific, Southwest and middle Atlantic states are paying more for insurance because of wildfires and hurricanes and are more likely to report problems renewing their policies. In addition, more than two-thirds of those surveyed said they were aware of steps they could take to protect their property, but only half of them had taken them.
Another factor impacting insurance coverage is the soaring costs of building materials and labor. According to the Bureau of Labor Statistics’ August Producer Price Index (PPI) report, building material costs have risen by 19.4% during the previous 12 months and 13% year to date.
3. Access to insurance experts is paramount.
As natural disasters continue to mount, lenders, mortgage servicers and investors with real estate portfolios are understandably concerned about their risk exposure. Fortunately, there are specific policies that cover disaster risks. But finding the best coverage that fits the unique needs of one’s business can be a chore.
For this reason, the best strategy is to partner with an insurance broker that partners with other insurance carriers to get the best coverage and rates. An experienced insurance broker is better equipped to understand your risks and how they are likely to change as the type and severity of disasters continues to evolve.
If you need assistance ensuring your portfolios are properly protected from disasters, please let us know. You can reach out to us anytime at 866-300-7020 or info@ILgroup.com. We’d be happy to help.
There’s no doubt, natural disasters and severe weather events are on the rise in the U.S.—and the impacts have been devastating.
In 2020 alone, there was a record 22 individual disasters that each caused more than $1 billion in damages, according to the National Oceanic and Atmospheric Administration. Disasters have hit everywhere, too—from wildfires in the West, to floods in the Midwest, to cyclones and hurricanes in the East and Southeast.
With hurricane and wildfire season still upon us, 2021 losses are adding up quickly as well. So too are the number of loss drafts that lenders are dealing with. In fact, we’ve never seen so many companies reaching out to us for help with this issue.
If you’re trying to get a handle on your loss drafts, here are three things to keep in mind:
Understand your risks
Managing and monitoring loss drafts is often frustrating, as lenders must make sure that all proceeds, inspections, and repairs meet specific loan terms and requirements. However, these challenges quickly escalate when loss drafts pour in after a natural or man-made disaster.
Lenders and servicers that have a high concentration of loans in areas prone to climate events are particularly vulnerable. Therefore it’s important to consult with experienced insurance professionals before obtaining coverage, so you can better understand your risks and how they are likely to evolve over time—particularly since the type and severity of disasters are constantly changing as well.
Your carriers must be prepared
It’s also critical to have insurance carriers that are responsive and committed to providing superior customer service regardless of the circumstances. They should have specialized processes for handling large numbers of loss drafts quickly and efficiently, as well as their own business continuity and disaster recovery plans and self-service options, so their ability to assist homeowners doesn’t falter when disaster strikes.
A trusted insurance broker can be of invaluable help identifying such carriers. They can also help find carriers that can meet your specific requirements for processing claims, whether that includes monitoring the claims adjuster’s reports, copies of repair estimates, or the contractor’s license and signed lien waiver.
Get help when you need it
Ultimately, your insurance partner needs to be able to manage the process of ensuring loss draft proceeds are released to the homeowner and the homeowner’s contractors in a timely manner. That includes paying attention to servicing and investor requirements, which dictates how loss draft funds are to be used and under what circumstances the funds can be applied to the loan balance. And they need to monitor the release of funds as repairs are completed and should utilize tracking systems to ensure multiple claims are being handled expeditiously.
At IL Group, we’ve been helping lenders overcome their loss draft challenges for more than two decades. Our relationships with many of the most trusted insurance carriers in the country also ensures our clients are protected from loss draft overload, too.
If you need assistance with loss drafts, please let us know—we’d be more than happy to help. Feel free to reach out to us anytime at 866-300-7020 or info@ILgroup.com.
An interesting thing happened at this year’s Olympic Games in Tokyo. The top two high jumpers, Italy’s Gianmarco Tamberi and Qatar’s Mutaz Barshim, were tied at the end of the event and appeared headed for a “jump-off” to decide who should get the gold medal. Instead, the two athletes decided to share it.
For many observers, it was the ultimate sign of sportsmanship. Others, however, were shocked. Why would someone work their whole life to be the best in the world, only to share the glory?
We get it. That’s because at IL Group, there are times when we partner with competing insurance providers to optimally meet a client’s business needs. But the question remains—why?
We’re more than an insurance provider.
When IL Group was founded more than 30 years ago, we decided we could provide better value to our clients by being both an insurance provider and a broker. From that point on, we built a team of the most experienced and knowledgeable insurance experts in the mortgage industry.
We also knew there would be times when a lender, bank or servicer may benefit from another insurance carrier’s products and services. Because we’re an independent agent, we are happy to get bids from other providers and present them to our clients, so they can compare options side-by-side. We do this at no extra charge, too.
There are other insurance providers that partner with competitors. Yet most of those insurance providers only partner with competitors for certain types of polices or services.
As far as we know, no other insurance provider partners with as many different competitors as we do.
We’re a one-stop shop.
When you choose a provider, you’re often restricted to the policies and services they offer. If you have others insurance needs—which most companies do—you’ll have to go elsewhere to find a provider that offers those products. That means managing relationships with multiple providers, which is not only cumbersome but potentially risky as well, considering lenders are responsible for the work their third-party providers do.
By partnering with competitors, we’re able to provide clients with all the insurance products and services they could ever need. From lender placed insurance to tax services, flood zone determinations, loan tracking, cybersecurity coverage and more, we can really do it all.
Plus, when you have an insurance broker that partners with the competition, you don’t have to maintain multiple relationships—everything you need can be provided through one company. And as a one-stop shop, we also take the time to work with our clients to better understand their unique needs.
We win when our clients win.
At IL Group, we pride ourselves on offering the widest selection of insurance products and services in the market. But there are times when a client might benefit from another carrier’s solutions. In such cases, we have no problem letting them know. That’s because we believe what’s good for the client is good for us, too.
However, as an independent agent, we’re not just committed to finding lenders the best coverage. We’re also dedicated to monitoring changes in coverage to make sure you always have the protection you need. Our insurance experts work hand-in-hand with your team when implementing policies, and we train your staff on these policies, too.
If you want to see for yourself what it’s like to get multiple quotes from different providers and a single point of contact to manage your needs, we’d be happy to show you. Just reach out to us at 866-300-7020 or drop us a note at info@ILgroup.com.
The only thing worse than encountering a major business challenge is not knowing anyone who can help you overcome it. At IL Group, we rarely have that problem.
That’s because we’re fortunate to have a dynamic team of experts with a wide range of skills, expertise and ingenuity—traits that they are constantly putting to use to make life easier for our clients. Below are a few of our “insurance all-stars” and why they are so important to our success.
Angelo Adams
Angelo understands mortgages and insurance like no other. His mortgage industry experience goes back more than 20 years, during which time he has worked as a mortgage branch manager and a retail branch executive for such companies as BBVA Compass Bank, RBC Bank and Wells Fargo Financial. In fact, at Wells, he not only sold mortgage loans but auto loans and consumer lines of credit too.
As our Regional Vice President of Sales, Angelo manages our strategic sales and operations, oversees all our marketing efforts and consults directly with financial institutions, lenders and servicers to make sure their needs are met.
Ketrick Kelley
Few insurance companies can say they have a legitimate G-man on their roster. But not only is Ketric a retired FBI Special Agent, he’s also an FBI Academy adjunct professor, a corporate trainer and a licensed insurance agent. Most importantly, perhaps, is that Ketrick is a Certified Information Security Manager (CISM) and one of our industry’s preeminent experts on cybersecurity.
A frequent speaker on cybersecurity issues, Ketrick has more than 20 years of experience collecting, securing, analyzing, classifying and managing evidentiary and digital information for the U.S. government. Ketrick oversees our internal information security program and our cybersecurity services, which have come under increasing demand as financial services firms face an alarming increase of cyberfraud attacks.
Ketrick also co-developed our “People Patch” e-learning platform, which provides clients with cybersecurity awareness training—a huge value to clients trying to prevent their businesses and their customers from becoming victims of cybercrime.
Tobi Libbra
We’re extremely lucky to have not one but two renowned cybersecurity experts on our leadership team.
As Regional Vice President of Business Development, Tobi consults on all our insurance products and services for financial institutions, servicers and title companies around the country. Tobi is also one of the few people in our industry to hold management roles in the real estate and mortgage industry. She’s a licensed real estate broker who owned her own brokerage firm for 13 years—and she is a real estate continuing education instructor in several states.
However, Tobi’s real passion is teaching cyber education courses to our colleagues, clients and partners as IL Group’s Director of Cybersecurity Awareness. A certified Cyber Insurance & Risk Management (cyRM) professional, Tobi believes education is key to stemming the cybercrime epidemic.
Kathy Boston
IL Group has many happy customers, and Kathy is a major reason why. As National Client Relationship Manager, she specializes in creating streamlined processes that help lenders, servicers and title companies operate more efficiently. A regulatory compliance expert, Kathy previously served as a mortgage servicing manager for the Alabama Housing Finance Authority, a foreclosure manager at Regions Mortgage and assistant servicing manager at Colonial Mortgage Company.
Kevrin Blessing
As our Vice President of Client Services, Kevrin’s pedigree in insurance and taxes runs deep. He was an account executive with Safeco FIS/Assurant, where he was responsible for fostering client relations and managing more than seven million loans, and began his career as a real estate tax liaison at Huntington Mortgage Company. A licensed insurance agent in the state of Ohio and a certified mortgage servicer, Kevrin is constantly finding more innovative ways to serve our clients.
With experts like these, it’s pretty obvious why we’re so proud of our team. And it’s a good thing we have them, too. As we emerge from the worst of the pandemic, the mortgage landscape is shifting fast. It’s a good time to ask yourself: Do I have access to experts who can help me navigate what lies ahead? Do they have deep relationships with different insurance carriers and stay up to date on all available different products and policies? Can they protect my customers’ personal information from email phishing schemes and other scams?
If you aren’t sure of these answers, reach out to us at 866-300-7020, and you may find yourself learning a thing or two from Kathy, Kevrin, Tobi, Angelo, Ketrick or one of our many other experts. They’re always ready to help.
When it comes to insurance, lenders have plenty of options. In fact, almost too many. We often hear of lenders that stick with the same carriers and policies year after year because they figure it’s easier than finding a new provider.
This strategy has drawbacks, though, especially since a lender’s insurance needs inevitably change over time. When they do, the same policies no longer offer adequate protection—and what seemed easy at the time suddenly becomes really expensive.
It’s true that finding the right provider for lender-placed insurance, risk management coverage and other types of insurance can be hard work. Fortunately, there’s a better way: using an insurance provider that is also a broker. Below is an explanation of why it makes sense to use an insurance broker.
1. You’ll have more choices
It’s pretty simple. With one insurance provider, you’ll always have a limited number of policies and services to choose from. With a broker, you’ll have many.
A broker’s job is to find the best coverage for your needs, spanning different insurance carriers and service providers. As an independent agent, the broker’s goal is to understand your insurance needs, identify the right coverage, bring in several different bids and let you compare them side by side.
There’s more. A good broker is staffed with experienced, licensed property and casualty insurance agents who have deep relationships with different insurance carriers and are current on all the different products and policies that are available. With such a broker, you’re even more likely to find the policies that work for your specific needs.
2. You get better value
Because they have relationships with different carriers, a broker is better able to find you the best coverage at the best price. They’ll do it at no extra cost, too. By taking the time to understand your goals and find the optimum carriers and policies, a broker can also help you significantly reduce risk and save money over time.
A good broker also keeps abreast of your needs and constantly monitors rate and policy changes to ensure you always have the best coverage possible. They can even customize policies for you when needed, so you get exactly the protection you’re seeking.
3. They’ll stick by you
The typical insurance agency will sell you an insurance policy and move onto the next sale. You may not hear from them until the next time you need insurance. A broker, on the other hand, is committed to finding you the best coverage, regardless of which company provides it. As a result, they have an incentive to ensure your needs remain met.
How does this happen? After a master policy is signed, for instance, the broker acts as a liaison between the insurance carrier and you. The broker’s dedicated client service team then works hand in hand with your team to implement your new policies and train your staff on them. For example, they’ll make sure your team is using the proper reports and understands how payments will be made.
While the benefits of using a broker are pretty obvious, the reality is there are very few brokers that specialize in lender-placed insurance. As a matter of fact, we believe IL Group is the only one.
As a broker, our team of certified insurance counselors has provided banks, lenders and servicers with every type of insurance product you can imagine for the past 30 years. We offer a wide range of additional services, too—including loan tracking, tax services, flood zone determinations, borrower verifications, cybersecurity coverage and much more.
Want to see for yourself how a broker can provide more choices as well as better value and service? Just drop us a note at info@ILGroup.com or call us at 866.300.7020. We’re happy to show you.
Benjamin Franklin called taxes one of life’s two certainties. But taxes are so inevitable that it can be easy to forget about them. That’s especially true when it comes to property tax payments, which too often strain a lender’s time and staff resources.
Of course, there are many companies offering to help lenders monitor property taxes or help pay them on behalf of their borrowers. The only problem is these providers are not all created equal.
So, what makes a good tax partner? Let’s go over some of the key attributes you should look for.
Experience
To get the best property tax services, it’s important to ask how long a company has been providing them and whether they actually specialize in them or not. A lack of experience in tracking property taxes typically shows up in third party tax liens and a potential loss in collateral.
Trustworthy providers will have tax experts among their leadership team with many years of experience as well as expertise in automating tax reporting, maintaining tracking compliance reports, managing third party relationships and more.
Flexibility
No two lenders or portfolios are the same. The right provider will have a wide range of flexible and reliable tax solutions, including tax payment services and delinquent tax searches that fit your needs–not someone else’s. They should be able to personalize their services as well.
It’s important to ask, for example, whether your partner can handle the specific functions you need on all your loans, both escrowed and non-escrowed, and can ensure you’re able to meet RESPA and CFPB tax audit requirements.
Technology and Data Access
It’s of utmost importance that property tax data on your portfolio is reliable, timely and accurate. That means you should have instant, online access to tax data as well as up-to-date escrow account information on every loan, including property tax due dates, delinquency dates and agency contacts to ensure timely payments.
This is not easy when you may be working with hundreds or even thousands of tax agencies nationwide. Good providers, however, have access to automated tax data from those agencies and can assist in processing tax payments with precision.
Often, you’ll find that tax service providers that invest in the latest technologies are better able to improve the efficiency of your staff as well. In addition to greater transparency, such providers can improve workflows and reduce risk. In particular, look for providers capable of integrating property tax data with your servicing platform, so you have one interface for all tax related work.
Support
We all know time is money. If you have questions or issues involving property taxes, how quickly can you get help? A good tax partner will offer comprehensive customer service and phone support, as well as training on any technologies they offer. They’ll have experts on staff who are able to research and address any tax-related inquiry, too.
The bottom line is that good tax service providers do more than keep your portfolio in compliance so you avoid having to pay penalties and fees. They empower your team to focus on what really matters: servicing customers and growing your business.
If you’re starting to think you spend too much time on property tax issues, we can help. IL Group manages all your property tax needs, from tax tracking to taking payments, performing delinquent tax and more. Our turnkey solutions simplify the tax burden while saving you time and money. And that’s always a good thing.
To learn more, contact us at info@ILGroup.com or at 866.300.7020. We’d be happy to help.
Sign up for our newsletter to stay up to date on changes in the insurance, tax, cybersecurity and risk management world.