It is late afternoon and you have had a full day with clients and examiners when you notice a certified letter on your desk. You review the letter and you are blindsided by the fact that your borrower has not paid their real estate taxes for over a year and now a third party has a lien on your property. This situation is unfortunately all too familiar for community lenders. Tax Liens are sold to investors in over 29 states. Local governments use property tax revenue to fuel the functions of public schools, police and park departments, libraries, and other vital local offices.
Lenders have several different options to protect their collateralized portfolios in the event that a borrower fails to maintain insurance. For many years, Collateral Protection Insurance or CPI, also known as force-placed, has been the prevailing product lenders have used to cover this risk. But now that blanket protection or VSI is available, many lenders are trying to choose between CPI and VSI.
In most states, VSI insurance can be directly disclosed and fully passed on to your borrower without affecting your Annual Percentage Rate (APR). Golden Eagle's VSI policy covers your financial institution for damage losses that you sustain from uninsured repossessions or skip losses where your borrower and/or collateral cannot be located (along with other coverages). By having the coverage, you are also relieved of the responsibility of tracking insurance documents on the covered collateral.