What  does Mortgage Impairment cover?

Mortgage Impairment covers errors and omissions that may occur in the day-to-day origination and servicing of mortgage loans. Proctor’s coverage includes physical damage and errors & omissions and complies with requirements of guaranty organizations like Fannie Mae, Freddie Mac, and Ginnie Mae. The following outlines the coverage options.  Any combination of sections can be purchased provided A or C are included. 

Section A (1): Physical loss or damage from “Required Perils.” Covers loss to the Assured’s interest through the uncollectability or non-existence of insurance against perils that are required by the borrower – including mandatory flood insurance - in the Assured’s loan closing procedures.

Section A (2):  Liability. Covers errors and omissions, on a claims made basis, relating to the Assured’s handling of physical damage insurance and homeowner’s insurance covering the real property of borrowers. The Assured’s defense costs are also provided for within the limits.

Section B( 1):  Real estate tax liability. Covers the Assured against errors and omissions relating to non-payment of real estate tax by the Assured on behalf of a borrower.

Section B (3):  Life and Disability insurance.  Covers the Assured against errors and omissions arising out of the Assured’s procurement and maintenance of life or disability insurance on behalf of a borrower.

Section B (4):  Flood Disaster Act 1973 liability. Covers the Assured against errors and omissions claims arising out of Assured’s duty to determine whether or not a particular property is in a flood zone.

Section B( 5):  GNMA procedures. Covers the Assured, as mortgage servicer, against errors and omissions should the Assured fail to comply with GNMA procedures which result in a guarantee being lost.

Section B (6):  Title Errors & Omissions liability. Covers errors & omissions arising out of the Bank’s failure to obtain the correct title insurance, or a title abstract or legal opinion as to a title depending on custom and practice.

Section B (7):  Recordation Errors & Omissions. Covers errors and omissions arising out of the Bank’s recordation of a loan as a servicer of a loan sold to GNMA/FNMA/FHLMC

Section B (8):  Satisfaction of Mortgage liability. Covers errors and omissions arising out of the Bank’s connection with the satisfaction of a mortgage on property in which the Assured holds an insurable interest. 

Section C:  Physical loss or damage from Balance of Perils. Provides insurance should the security for the loan suffer a physical loss from any other cause other than outlined in A(1), and the Assured be unable to recover the loan from the borrower.

 Section F:  Loss of Veterans Administration, Federal Housing Administration, Small Business Administration and private mortgage guarantee coverage. Covers loss to the Assured’s interest should he fail to provide to a ‘mortgage guarantee’ agency or Insurance Company its property notice of loans in arrears.

 Section G:  Loss of Security Interest due to Defective Title.

 Section H:  Custodial Errors and Omissions. Losses incurred due to the verification, certification, maintenance and custody of documents concerning loans sold to GNMA, FNMA or FHLMC.