Mortgage Loan Servicing FAQs - Property Insurance
- What should I do when I receive the renewal notice from my insurance company?
- What is the maximum amount of deductible that I can have on my homeowner's policy?
- What is the amount of dwelling coverage that I need on my homeowner's policy?
- What should I do if I receive a
cancellation notice from my insurance company?
- What
is force placed insurance?
- Can I change my insurance
company at any time?
- Why was flood insurance not
required when I took out my loan but is now?
- Who can I
contact if I disagree with the Federal Emergency Management Agency (FEMA)?
- What do I need to do if my property is removed from
the Special Flood Hazard Area (SFHA)?
- What is
the maximum amount of deductible that I can have on my flood policy?
- What does my coverage amount need to be on my flood policy?
- What must I do if I have property damage?
- Why is Charter Bank's name on my insurance claim check?
What should I do when I receive
the renewal notice from my insurance company?
Review the notice
to make sure that you have the coverage amounts that you need and to make sure
that Charter Bank is listed as mortgagee. If we are listed as mortgagee, we
will receive a copy of the renewal notice. If we are not listed as mortgagee,
please notify your agent to list Charter Bank as mortgagee and have them
forward a copy to us. We will review the policy to make sure that it meets our
requirements. We will pay the premium 22 days prior to the due date of the
premium.
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What is the maximum amount of deductible that I can have on
my homeowner's policy?
Your deductible can not exceed the higher
of $1,000 or 1% of your dwelling coverage amount.
| Example
1 Your policy coverage amount is $87,000 1% would be $870 ...................................................................... In this case, you can have up to $1,000 deductible |
| Example
2 Your policy coverage amount is $120,000 1% would be $1,200 ...................................................................... In this case, you can have up to $1,200 deductible |
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What is the amount of dwelling coverage that I
need on my homeowner's policy?
The amount of coverage that is
required is the higher of:
| The unpaid
principal balance up to 100% of the full replacement cost of the insurable
improvements or 80% of the full replacement cost of the insurable improvements. Replacement cost is determined by your insurance company/agent. |
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What should I do if I receive a cancellation
notice from my insurance company?
Review the notice to see why
your insurance policy is being cancelled. If it is for non-payment, please
contact Charter Bank immediately at 505-291-3021 or 800-366-7621.
Charter Bank will receive a copy of the cancellation notice, as long as we are listed as mortgagee. If the policy is being cancelled for other reasons, you will need to work with your agent to get the policy reinstated or possibly find another insurance company.
You will have 60 days from the date of
cancellation to provide Charter with either a reinstated policy or a new
policy. During the 60-day period you will receive two letters from Charter Bank
notifying you that we will force place insurance if you do not provide us with
a new or reinstated policy by a specified date. Sixty days from the date of the
cancellation notice, we will obtain a force placed policy on your behalf and
pay for the premium out of your escrow account.
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What is force placed insurance?
Force placed insurance provides coverage for the structure only
and does not cover contents, damage due to earthquake or flood, theft, or
injury to persons or property for which you may be liable. The premium charged
for force placed insurance can be substantially greater than that charged
through a standard insurance company. After Charter pays the premium on the
force placed insurance, your escrow account is reanalyzed and your payment will
be increased accordingly.
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Can I change my insurance company at any time?
Yes, you can. If you change your insurance company on the renewal date
of your current policy, these are the steps you need to take:
|
Once we have received all of the above, we will update our system to reflect the new insurance company and prepare the payment to be paid from your escrow account.
If you are changing insurance companies on any date other than your renewal date, these are the steps you need to take:
|
Once we have received all of the above,
we will update our system to reflect the new insurance company. We will begin
paying the premium for your new insurance company at next year's annual
renewal.
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Why was flood insurance not required when I took out my loan
but is now?
At the time of closing, it was determined that your
property was not located in a Special Flood Hazard Area (SFHA). Periodically,
the Federal Emergency Management Agency (FEMA) publishes a list of all changes
to their flood maps. Once Charter Bank becomes aware that your property is
placed into a SFHA, then we, as a federally insured lender, are required to
notify the borrower of the mandatory purchase of flood insurance.
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Who can I
contact if I disagree with FEMA?
| If your state is... |
Call
|
| New Mexico, Texas |
281-531-5990 |
| Florida |
770-396-9117 |
| Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin |
630-577-1407 |
| Colorado, Montana, Utah, Wyoming |
303-275-3475
|
| Arizona, Nevada |
916-334-1720
|
| Idaho, Washington |
425-646-4908
|
For further information please visit the
FEMA website at www.fema.gov.
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What do I
need to do if my property is removed from the Special Flood Hazard Area
(SFHA)?
You will need to provide Charter Bank with the letter
from FEMA showing the change. We will then verify the change with our flood
service company.
Charter Bank does not automatically
cancel your flood insurance. If you want to have your flood insurance
cancelled, we will need a letter from you requesting the cancellation of your
flood policy. We will then send a letter to your insurance company requesting
the cancellation and advise them to send the refund of any unused portion of
the premium, if applicable, to you. We will have your escrow account reanalyzed
to reflect the removal of the flood insurance and adjust your payments
accordingly.
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What is the maximum amount of deductible that I can have
on my flood policy?
Your deductible can not exceed the higher of
$1,000 or 1% of your dwelling coverage amount.
| Example 1 Your policy coverage amount is $87,000 1% would be $870 ...................................................................... In this case, you can have up to $1,000 deductible |
| Example
2 Your policy coverage amount is $120,000 1% would be $1,200 ...................................................................... In this case, you can have up to $1,200 deductible |
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What does my coverage amount need to be on
my flood policy?
The insurance limits must be at least equal to
the higher of:
The unpaid principal balance up to 100% of the full
replacement cost of the insurable improvements, or 80% of the full replacement
cost of the insurable improvements.
| Example
1 Principal balance $53,000 Dwelling coverage amount from your homeowner's policy $60,000 (as established by your insurance company/agent) 80% of $60,000 is $48,000 ...................................................................... In this case you need to have your flood coverage amount equal to your principal balance of $53,000 |
| Example
2 Principal balance $31,000 Dwelling coverage amount from your homeowner's policy $65,000 (as established by your insurance company/agent) 80% of $65,000 is $52,000 ...................................................................... In this case you need to have your flood coverage amount of $52,000 |
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What must I do if I have
property damage?
You need to contact your insurance company/agent
immediately. Please notify Charter Bank of the damage. Depending on the type
and amount of damage, we may need to have an inspection done on the property.
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Why is
Charter Bank's name on my insurance claim check?
Our name is on
the insurance check because of the mortgage lien we have on your property. We
have an interest in the property as the lienholder. We are required to make
sure that the insurance proceeds are used to repair the property. Please call
the escrow department at 800-366-7621 or 505-291-3021 for details.
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The information contained in this FAQ is
intended only as a guideline. Please contact us if you need more information
relating to your mortgage loan.
