[kjgreen]

Thanks rcooper. The following is an excerpt from FIL 14-2013. How does this change our process? We have been debating this and can’t seem to come to an agreement. The fact that the amdendment states that we can charge the borrower premiums and fees from the date of lapse, provided that they do not get their own coverage, is throwing us off.

Biggert-Waters Act Amendments
 Force Placement: The FDPA provides that a lender or its servicer must notify a
borrower if it determines that the flood insurance coverage on the improved real
estate or mobile home serving as collateral for the borrower’s loan has expired or is
less than the amount required for that particular property (42 USC 4012a(e)). The
notice must inform the borrower of the need to purchase flood insurance. If the
borrower fails to purchase flood insurance within 45 days after notification, the lender
or servicer must purchase flood insurance on behalf of the borrower and may charge
the borrower for the cost of premiums and fees incurred by the lender or servicer.
The Act amends the FDPA to:
o Provide that the premiums and fees that a lender or servicer may charge the
borrower include premiums or fees incurred for coverage beginning on the
date on which flood insurance coverage lapsed or did not provide sufficient
coverage amount;o Require the lender or servicer, within 30 days of receiving a confirmation of a
borrower’s existing flood insurance coverage, to terminate any force-placed
insurance and refund to the borrower all force-placed insurance premiums and
any related fees paid for by the borrower during any period of overlap
between the borrower’s policy and the force-placed policy; and
o Require a lender or servicer to accept as confirmation of a borrower’s existing
flood insurance policy a declarations page that includes the existing flood
insurance policy number and the identity and contact information for the
insurance company or agent.

[kjgreen]

One more question about this subject, and hopefully I’m done! I think we may have run across a loophole. The scholarship fund that we service for is monies left to an estate. The executor is a local attorney. These funds are not federally insured, nor is the “lender” federally regulated–which appears to mean that they are not federally regulated mortgage loans. Am I on the right track here?

[kjgreen]

I read through the proposed rule. Apparently the attorney compensates us very minimally once a year–none in connection with any of the loans. If we forego this “handling fee” and it becomes true charitable servicing, under the condition that the proposed rule becomes final, would we then still qualify as a small servicer? I don’t see any reason why we would not, as the rule does not appear to look historically.

[kjgreen]

I vote Lines of Battle!

[kjgreen]

Thanks rcooper. The scholarship loan program has less than 5,000 mortgage loans, as well, so this would allow us to qualify, correct? That is the way I’m reading the commentary.

[kjgreen]

We are in question on whether or not we fall under the small servicer exemption. We have far fewer than 5,000 mortgage loans, but we take payments for a “scholarship loan fund” started by a local attorney. We receive payments, but we do not take the action of a creditor or do any IRS reporting. We do not fund the loans, however some of them are secured by the borrower’s principal residence. Thoughts?

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