April 20, 2012 at 1:03 pm EDT #2483kowsleyMember
I am looking for some guidance on lending to the Mennonite/Amish community. We are being bombarded with loan requests from this group; however, it has been very difficult to complete a transaction for them given their limitations on having homeowner’s insurance and/or flood insurance. Their religious beliefs restrict them from purchasing any type of insurance. My concern is that “waiving” homeowner’s insurance for this community and not others will be an ECOA violation, as well as, UDAAP. We have had a few loans where we have just been able to take land and have been fine but when their are structures on the property we run into issues. Any thoughts???April 21, 2012 at 12:45 am EDT #2784jholzknechtKeymaster
I have discussed this issue with a number of lenders around the US. In lieu of a hazard policy they get a letter, similar to a guaranty, from the church elders that states that the church will rebuild or repair the house if it is damaged. This letter will not work for flood insurance; FEMA does not provide any exceptions for this scenario.April 25, 2012 at 2:01 pm EDT #2763EvelynParticipant
I’m from Lancaster County PA. Generally, mutual aid insurance is available by each Amish or Old Order Mennonite “district” and the local Bishop should be able to provide a letter that any losses will be covered by the district. But in order to accept this coverage, you will first probably need to define lending to the Amish (or other religious sect) as a “Special Purpose Credit” in your loan program and spell out what you will accept in lieu of hazard insurance. I agree with Jack that they cannot be exempted from FEMA requirements for flood insurance.
Another issue commonly encountered is customer identification for the Amish/Old Order Mennonites. This is possible. Though they don’t have driver’s licenses (after they’ve joined the church around age 21; males can/do have DLs between 16 and that age while they are “sowing their wild oats”), they can get state-issued ID cards from the Dept of Transportation. Though they don’t accept government programs, they still work, vote, will file income taxes, and will have a social security card. Plus many of them work off the farm and ID/SSN are required in those circumstances. Or your program can define alternate identification such as a copy of a tax bill (ex: real estate ownership), utilities (they can use cell phones but only in the barn!; they do have propane gas service), or other services (dry goods store, farm supply store, etc.) where they get bills that can provide address, account number, date of issuance. As nondocumentary verification, your program could define a letter of identification from their local Bishop that they are a member of the local district. The most difficult issue is identifying Amish/Old Order Mennonite women – they are generally not allowed to own land or establish services. In this regard, your policy will need to provide for a Birth Certificate and Social Security Card because that’s about all they will have.
Hope this helps 🙂 !April 27, 2012 at 8:12 pm EDT #2774jholzknechtKeymaster
Special thanks to edehmey for the excellent expansion on my answer.
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