Secure Settlements Seeks To Protect Lenders From Losses

Posted by Patrick Barnard on April 03, 2014 No Comments
Categories : Residential Mortgage

Secure Settlements Inc. (SSI), a data intelligence and risk analytics company for the mortgage industry, has partnered with RFIB Group Ltd. and certain underwriters at Lloyd's of London to offer the Mortgage Settlement Insurance (MSI) Policy to protect lenders from fraud.

According to SSI, the new insurance product will protect retail mortgage lenders using SSI's ClosingGuard service away from losses arising at the closing table, such as fraud, theft and documentation errors.

Coverage extends to warehouse banks and secondary market investors, including government-sponsored enterprises, and may also be available to consumers who are indemnified for losses at the closing table, notes SSI.

SSI says its vetting process, developed after several years of consultations in London, Bermuda and New York with insurance industry risk professionals, will be the basis for the MSI Policy.Â

The Lloyd's syndicates will require a closing agent to have a rating of "low risk" by SSI for the agent to be eligible for coverage. The MSI Policy will be marketed and administered by surplus lines broker Grace Church Intermediaries LLC, working in partnership with insurance agents nationwide and the appointed insurance intermediary, Lloyd's-registered broker RFIB.

According to Jeremy Brasier of RFIB, the policy will provide "additional protection in an ever-evolving lending environment and [give] lenders more certainty as they adapt to new landscapes."

Unlike other types of coverage or protection, SSI explains that the MSI Policy covers theft of bank funds, borrower funds and seller funds; willful blindness; negligent funds disbursement; failure to follow closing instructions; collateral mistakes; conspiracy; and failure to record.Â

SSI gives the following statistics about recent fraud: The Federal Bureau of Investigation says that lenders filed more than 98,000 suspicious activity reports in 2013 and reported 1,220 indictments of mortgage fraud in 2012. Meanwhile, escrow and closing fraud grew more than 20% in the past three years, according to the Financial Crimes Enforcement Network of the U.S. Department of the Treasury.

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