Lender Placed Insurance - What is a peril?

The term “peril” within a Lender Placed Insurance Policy refers to the hazards and/or events that cause damage or loss to a property. An example of a peril could be fire, hail, vandalism, wind and much more. The reason why these are considered examples of perils is because they could potentially cause damage, or loss to a property. Perils are also referred to as “risks” within a Lender Placed Insurance Policy.

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What is Lender-Placed Insurance?

Lender-Placed Insurance, also known as Force-Placed Insurance is a type of insurance policy placed on a property by a lender or a loan servicer when the property owners’ own insurance is cancelled, lapsed or is deemed insufficient. If the property owner does not secure a new replacement policy in a timely manner for the property, a lender may Force-Place Insurance to protect its financial interest in the property.

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First Service Corporation Launches Borrower Learning Center

First Service Corporation is pleased to announce the launch of their new borrower facing website, www.fscinformation.com. This website will be geared towards borrowers, giving them insight into the insurance plans offered through First Service Corporation and your financial institution.

Our hope is that borrowers will be able to visit www.fscinsurance.com to learn more about programs such as Mortgage Life & Disability, and Credit Life & Disability in an effort to read about the features and benefits. Our plan is to continually educate borrowers and financial institutions on the features and benefits of insurance programs that help secure loans, as well as protect the borrower from the unexpected.

Please visit www.fscinformation.com to learn more. 

Life Insurance - Is your borrower protected?

Life insurance is exactly the first type of coverage we think about when thinking about insurance. In a market full of options and "savings", it's hard to determine what insurance is necessary, and which is not. 

The investment a borrower has made in their home is one of the largest financial commitments they will make in their lifetime. As we start to think about and discuss how to protect this financial commitment, Life Insurance may not be top of mind, but it should be. Mortgage Life Protection can not only be a very affordable coverage, but it can also protect the home your borrower has built, and protect any survivors in the event of death. 

Mortgage Life Protection Programs are invaluable plans that help protect the borrower from defaultingon their mortgage loan in the event of death. Borrowers benefit knowing that their mortgage loan will be paid off and they will not have to worry about their family struggling to make mortgage payments. Although Mortgage Life Protection protects the borrower and their family, Mortgage Life Insurance also protects the financial institution servicing the loan. By offering Mortgage Life Protection to your borrowers, you are helping to secure the loan for you financial institution. 

Below are just a few statistics that can be shared with your borrower when discussing their financial commitment.

Are your borrowers prepared for the unexpected?

There are two different types of coverages that fall under Credit Insurance. These coverages consist of Credit Life Insurance and Credit Disability Insurance. Each coverage type has its own features and exclusions that must be met in order for a borrower to apply, and be eligible.

Disability Insurance is a coverage that is highly overlooked and should have more of a focus put on it at time of loan closing. As a financial institution, your main collateral for a loan is the ability for a borrower to pay it back. If a borrower becomes disabled, or too sick to generate income to repay a loan, your collateral is lost. It is important that each and every borrower is made aware of their responsibilities to repay a loan and that they prepare for the unexpected.   

Lenders Single Interest for Vehicles

Vendor Single Interest (VSI) protects the Financial Institution of uninsured losses and eliminates the need to track and force place insurance after loan closing.

The Vendor Single Interest policy saves time and administrative expenses by eliminating the need to track and force place insurance. In return, the policy also helps to improve customer relationships by avoiding negative contact with customers. Although the Vendor Single Interest policy eliminates the need to track and force place insurance, the Financial Institutions should continue to verify coverage at time of loan closing. After loan closing, no further tracking is required as long as the loan agreement contains wording specifying the borrower must contain adequate insurance throughout the term of the loan.

The pricing of this program is very affordable based on the loss ratio of the Financial Institution. There is a one-time cost per new loan, which makes this policy affordable and valuable.   

To request more information or pricing on this program, please click the button below.

Does your Title Search provide Protection?

First Service Corp offers a unique solution to costly and time consuming Title Searches on Home Equities, Second Mortgages, and First Position Home Equities.

The Mortgage Lending Activities Policy through First Service Corporation is a program that provides valuable insurance protection where “search only” products do not. Not only does it provide insurance for the Financial Institution, but it is 30% to 70% less than the cost of a search-only product.

Search-only products can delay the closing of a loan, and put an additional cost on the customer. The Mortgage Lending Activities Policy can help your Financial Institution speed up loan closings, provide protect, and save your customers money.

To request more information on this product, please click the button below.

Why Mortgage Protection?

Mortgage Protection Programs offer a number of benefits, not only to the customer, but to the financial institution as well.  

For a customer, it can be a scary moment when applying for a mortgage. It’s one of the biggest investments we will make in our life time, and if there ever becomes a time that we cannot pay back that loan, it becomes even scarier. First Service Corporation offers unique Mortgage Protection Programs to relieve some of the stress, and give customers some peace of mind when making that “big investment”.

First Service Corporation offers Mortgage Protection Programs that fit the needs of your customers, and help secure their loan. The following are the Mortgage Protection Programs offered by First Service Corporation:

Mortgage Life Insurance

This plan has tobacco and non-tobacco user premium rates and pays the scheduled outstanding balance at time of death subject to the plan maximum when the loan balance is 100% insured.

 2 in 1 Life Plus

The plan is a unique low cost alternative to full mortgage life, because the rates are the same for all ages.  Borrowers can choose any amount of monthly benefits up to the total monthly mortgage payment.  How the plan works:

·         Natural Death: Pays 24 monthly benefit payments in the amount the borrower(s) initially chose.

·         Accidental Death: Pays loan balance up to $100,000 … PLUS … the 24 monthly benefits to the survivors

*Not available in all states.

 Accidental Death Insurance

This product provides coverage in the event of a covered accidental death.  Accidental Death is available to any mortgagor regardless of health, which means a guaranteed Issue! There are also no physical exams or health questions to qualify. This plan is a low cost alternative for applicants whose health disqualifies them for mortgage life.

 Disability Insurance

This is an important coverage for all employed mortgagors. It provides monthly benefits subject to plan maximum but no more than the total monthly mortgage payment at time of application. Available for both single borrower and co-borrower.

For more information on offering Mortgage Protection Programs, please click the button below

Why Credit Insurance?

Credit Life Insurance evolved from the concept advanced by the insurance industry that “No Debt Should Survive Its Maker or Ever Become a Burden to Others.” The concept of credit insurance is equally important to the loan borrower as it is to the creditor. In this sense, the creditor is accepting a responsibility of interest in the continued well being of its borrowers by offering the option of credit insurance.

Financial institutions and borrowers become increasingly aware of its value in minimizing family financial stress in time of death or disability. Credit Insurance provides a peace of mind and family security, and should be readily available to the borrower at time of loan application and closing. With credit insurance, the borrower knows that in the event of death or disability their family will be protected and their obligations met.

The creditor or financial institution that recognizes the value of credit insurance and provides its availability is rendering service to its loan borrowers.

To request more information on Residential Evaluations and pricing, please click the button below. 

Do Your Borrowers Have a GAP in Coverage?

Guaranteed Asset (or Auto) Protection, commonly known as GAP Insurance, is actually a DCA product and can be offered by all National chartered and most State chartered financial institutions.  GAP coverage can be offered to your borrowers as an Addendum to your Loan Agreements in which they are charged a certain price for this valuable protection.

GAP is, a “two-party contract between the lender (your financial institution) and its borrower (your borrower), outside the purview of insurance laws.” The GAP program is truly “your financial institutions product”, First Service Corporation works with partners to help administer the GAP program, and the financial institution is protected by a Contractual Liability Insurance Policies (CLIPs) provided by a Casualty Insurance Company.

Because GAP is “your” financial institutions product, First Service Corp and its partners have designed a GAP program that offers the broadest possible coverage for you and your borrowers.  Your borrowers deserve the best GAP program possible and our GAP program will help you to have satisfied customers and reduce potential lender charge-offs.

To request more information on Residential Evaluations and pricing, please click the button below.

What’s The SCOPE on Residential Evaluations?

The current rules demand that if financial institutions utilize AVMs (Automated Valuation Models), they must also document the actual condition of the property. Furthermore, they must evaluate critical market conditions to adhere to internal collateral protection policy.

First Service Corporation offers a report that combines all the necessary data and information to comply with the latest regulations. The SCOPE Report assists Lenders in their requirement to comply with the new Interagency Guidelines.

There are a number of factors that that must be met in order for a report to comply with the Inter-Agency Guidelines.

According to the Interagency Appraisal and Valuation guidelines, an evaluation should contain sufficient information detailing the analysis, assumptions, and conclusions to support the credit decision. A Valuation’s content should be documented in the credit file or reproducible. The Valuation should, at minimum, contain the following:

  • Identify the location of the property
  • Provide a description of the property and its current, and projected use
  • Provide an estimate of the property’s market value in its actual physical condition and Property Type as of the effective date of the evaluation (that is, the date the analysis was completed), with any limiting conditions, if any
  • Describe the method(s) the institution used to confirm the property’s actual physical condition and the extent to which an inspection was performed
  • Describe the analysis that was performed and the supporting information that was used in valuing the property
  • Describe the supplemental information that was considered when using an analytical method or technological tool

Indicate all source(s) of information used in the analysis, as applicable, to value the property, including:

  • External data sources (such as market sales databases and public tax and lad records),
  • Property-specific data (such as previous sales data for the subject property, tax assessment data, and comparable sales information
  • Evidence of a property inspection,
  • Photos of the property
  • Description of the neighborhood; or
  • Local market conditions

To request more information on Residential Valuations and pricing, please click the button below. 

Collateral Insurance Tracking

First Service provides solutions and services to meet the demands of their clients. In an effort to meet these demands, First Service Corporation has combined forces with partners to offer Insurance Tracking Services

Insurance Tracking tracks insurance on, but not limited to automobiles, trucks, trailers, motorcycles, boats, mobile homes and real estate.

When your institution elects to use a Insurance Tracking Program, a computer file is initiated for each loan and match incoming insurance mail to that loan. 

If a borrower’s insurance cancels, expires, or is not received, notices of the insurance requirement are issued in accordance with CFPB and Biggert-Waters Flood Act regulations. 

If proof of insurance is not received, the third party tracking partner will issue a lender placed policy insuring the collateral for the Lender.

There are typically three different options when considering an Insurance Tracking Service:

  • Out Source Tracking (OST)
  • Track Your Own (TYO)
  • Write Your Own (WYO)

Each of the three different options is unique in one way or another. First Service is dedicated to finding the solution that best fits the needs of your institution. To receive more information on an Insurance Tracking Service, please click the button below. 

First Service Corporation - Back To Our Roots

First Service Corporation has its roots back to 1929 as a local all lines agency servicing the general public.

In 1962, Paul Naz was at conference for one of the life insurance companies The Naz Agency, Inc. represented.  Each general agent attendee was asked to describe how they market life insurance. One of the attendees from Shaker Heights, Ohio described his operation as follows: “We have an arrangement with Shaker Heights Savings and Loan Association where they give me a list of all the mortgages they make each week.

On the plane ride home, Paul couldn’t get that presentation out of his mind. He thought, “What a neat way to sell insurance.  All I have to do is find a banker who is willing to listen to me.”

Well, the rest is history.

In 1964, Paul received a big break when a banker agreed to let Paul take over the bank’s mortgage insurance program, underwritten by Federal Life and Casualty Company in Battle Creek.  An office was opened in Pontiac and the agency was named First Service Corporation.  That was the beginning of First Service Corporation.

In 1965, an executive of Federal Life and Casualty took a liking to Paul and arranged to have FSC handle the insurance program for Michigan Bank, which later became a part of Michigan National Corporation.

Between Michigan National Bank and Pontiac Bank, First Federal Savings of Oakland, over 5,000 mortgages were being generated annually. Since the insurance program was not a group plan, there was need to recruit agents to call on the new mortgagors. With Michigan National located in downtown Detroit and First Federal in Pontiac, FSC moved its office from Pontiac to Eight Mile Road in Detroit, halfway between the two Banks.

In 1966, FSC submitted a bid for a disability program for what was then the Michigan Savings & Loan League Member Association. FSC was awarded the League’s endorsement. Paul was able to begin to concentrate on an area of insurance specialization that even to this day very few agents nationally have chosen to enter.

Paul covered the entire state for 11 years, calling on Banks and Savings and Loan institutions. In 2013, Paul passed away leaving a legacy through First Service Corporation, and a mark on the financial institutions that he had the pleasure of working with.

First Service Corporation celebrated its 50th year anniversary in 2014. First Service Corporation continues to service insurance programs for over 150 lenders in 13 states. The key to continued growth has been an unwavering commitment to best-in-class service. First Service Corporation continues in the specialization of insurance products for Financial Institutions, which is their only line of business. First Service Corporation has been an integral part of the fabric within the Michigan Financial Institution Community.