Financial institutions have always wrestled with one main issue when it comes to tracking insurance on their loan collateral: staying properly protected at an affordable price. Since uninsured losses are rare, especially large losses, lenders try to spend as few dollars as possible on staff tasked with keeping track of insurance. However, the risk of a large uninsured loss and the regulations dictating that loans be properly tracked, lead to costs that are much higher than desired, as well as negative customer interactions, all of which could be avoided.
- Employee pay, taxes, and benefits
- Management time and expense
- System costs of tracking
- Postage and phone expense
- Letterhead and envelope costs for notification letters
- Training expense
- Examiner scrutiny
The vast majority of your customers (typically 98 or 99%) have protection on their collateral at any given time. The tracking expenses above are being incurred for 1%-2% of your portfolio, and as you know, it is very time consuming and costly. Blanket Mortgage could be the answer to these high costs while still properly protecting your portfolios. With Blanket Mortgage coverage you have the same type of protection that a lender-placed policy would provide. Additionally, Blanket Mortgage coverage is superior to typical lender-placed insurance because it’s automatic. There are no steps that need to be taken to obtain it, there are no employees depended on to catch a lapse of coverage on a borrower’s loan, and the protection is in place 24/7/365 days a year regardless of what actions your staff does or doesn’t take. Thus, the risks associated with human error are eliminated. Furthermore, all of us have seen the endless series of legal challenges and settlements involving traditional lender-placed/force-placed insurance tracking programs. Blanket Mortgage eliminates the types of legal risks that come with the traditional use of force-placed coverage.
Keep in mind that Blanket Coverage is not just for mortgage loans. Blanket Equipment and Blanket VSI protect non real-estate collateral. Click here to learn more about Blanket Insurance for Lenders.
More information can be found on Blanket Mortgage Protection in our Ebook, "An introductory guide to Blanket Mortgage Insurance Coverage and how it can reduce costs while fully protecting your mortgage portfolio."