The process of obtaining reliable evidence of insurance has become increasingly difficult for mortgage servicers, according to a new report published by Standards & Poor's RatingsDirect.
The report, titled ‘U.S. Mortgage Servicers Are Still Having Trouble Obtaining Commercial Property Insurance Policies,’ says that during Standard & Poor's Ratings Services' servicer evaluation reviews, servicers consistently have reported difficulties in receiving commercial property insurance policies. Some servicers estimated that they have received 60% to 70% of their loans' renewal insurance policies, while others reported that only 30% to 40% of their loans have full renewal policies.
‘In either case, servicers have to rely on other transitory forms as proof of coverage until they receive their renewal policies,’ says the report. ‘And when the actual policy does arrive, the servicer must then review and interpret it – a process that requires specially trained personnel. The servicers we rank report that they frequently identify multiple deficiencies in the policy documents, which then must be corrected.’