Flood Insurance Compliance

Clayton® Flood Insurance Compliance Ensures Best Execution of Regulatory & Investor Guidelines to Mitigate Losses

Clayton helps servicers and subservicers measure their performance, validate regulatory and investor compliance and identify loan and portfolio-level risk. We provide unbiased and independent findings, delivered as anonymized performance benchmarking.

Trends in Flood Insurance

Flood insurance compliance is a growing area of interest for regulators, with topics of concern including borrower harm, insufficient coverage, force-placed insurance and losses.

Additionally, FHA announced a proposed rule to allow private policies to align FHA with Fannie and Freddie, driving a continued rise in private policies. However, there is risk because errors happen when vendors are tasked with validating coverage adequacy and initiating required borrower correspondence.

Look at this scenario:

An average servicing portfolio with 1 million loans might see a 2% incidence of properties in a flood zone.

  • With 20,000 properties in a flood zone, a 5% error rate would equate to 1,000 violations.
  • At $2,000 each, the fine levied on the servicer is $2,000,000, plus the expense of remediation of the problem.

To Ensure Flood Insurance Compliance, Know the Accuracy and Diligence of Your Insurance Vendor or Internal Team

Ask for a Targeted Flood Insurance Compliance Review

Findings are delivered at a fraction of the cost of fines, with operational best practices and remediation guidance. Useful for servicers and investors employing sub-servicers.

Consider Clayton’s Flood Insurance Oversight

Oversight of your riskiest loans or your entire portfolio assures that you can address gaps or shortcomings before they cause problems. These high-risk loan pools include:

  • Portfolios with a higher floodplain concentration
  • Higher incidence of private insurance for high-end homes
  • More activity regarding placement or cancellation of insurance

Team with Clayton to validate the Flood Disaster Protection Act (FDPA) and federal servicing compliance and confidently meet GSE, FHA, VA, USDA and private investor standards and guidelines.

Partner with Clayton today.

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