Pub. 5 2016 Issue 2

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 10 KBA LEADERS LEDGER MORTGAGE IMPAIRMENT ERRORS AND OMISSIONS By Kent Owens,VP, KBA Insurance, Inc. R ISK MANAGEMENT is a critical piece of the lending process. There are a variety of insurance products designed to help banks manage their risk. One solution for mortgage lenders is a Mortgage Impairment Errors and Omissions (MIEO) policy. This policy makes the risk management process less complicated for community banks by combining a number of coverages under one policy. MIEO provides coverage to protect the bank's interest in mortgaged property when borrowers fail to maintain required property insurance. This policy protects the bank from loss due to fire and wind damage and extends to cover losses from vandalism, malicious mischief and earthquakes. This policy also contains liability coverage for risks lenders are faced with during loan servicing. These exposures include failing to pay escrowed insurance premiums causing a lapse in borrowers coverage, failing to pay taxes or failing to identify mortgage properties in special flood zone hazard areas. MIEO is primarily written for mortgage servicers, but is also purchased by banks originating mortgages, in order to comply with federal and state mortgage regulations and requirements. MIEO can provide essential coverage for the banks' entire real property loan portfolio. 1-4 family residential loans, commercial loans, construction loans, and home equity loans and second mortgages are covered under the blanket MIEO policy. In challenging economic periods when delinquencies and foreclosures are at record highs, MIEO has become vitally important as the exposure of uninsured property losses increase for lending institutions. With the increasing demand on lenders for loan originations, refinances and loan modifications, regulatory burdens increase, making this coverage more valuable than ever. The broadest form of MIEO coverage requires lenders to obtain evidence of property insurance at loan closing only. No further tracking of physical damage insurance or lender placed hazard insurance is required. Banks may consider the virtual elimination of the insurance tracking function for mortgage property and for separate premiums for forced place hazard policies. Apart from the cost of separate insurance, which can be substantial, the savings generated by reducing or perhaps eliminating tracking insurance can be considerable. For 15 years, the proven resource to help provide home loans to Kansas communities! It’s vitally important to whom you entrust your customers and your bank’s reputation… Let us show you why the experienced folks at MISC are the ones who will earn that trust! QM, ATR and TRID got you down? MISC can ease your regulatory concerns! Contact Bill Cole, Sr. Account Executive 316-706-7306 or Andrew Holtgraves, Account Executive 913-390-1010 ext. 1019 MORTGAGE INVESTMENT SERVICES CORPORATION 22316 Midland Drive Shawnee, Kansas 66226 913-390-1010 NMLSR # 194708 Associate Member – Kansas Bankers Association Bill Cole, Sr. Acct. Exec. Andrew Hol t graves, Account Executive We can always rely on quick responses to our questions or when we need help. The staff members are very personable and accommodating. With the assistance of MISC we can accommodate almost any borrower to purchase or refinance their home loan.” - Marion Dreher, Sr. Vice President Bank of Hays “I have truly enjoyed working with Mortgage Investment Services Corporation. Their staff is courteous and helpful every time I have worked with them. They have programs that allow us to offer other loans options to our customers that typically smaller banks wouldn’t be able to offer. This allows us to grow our business locally with new customers so it’s a win – win situation.” - Jacque Golemboski, Asst. Vice President/Mortgage Loan Officer Farmers & Merchants Bank, Colby EXPERIENCE COUNTS!