Lenders save time, money and frustration by simplifying hazard insurance verification
Engaging a specialized team can speed up the loan process and help reduce errors
Verifying homeowners — or hazard — insurance is a time-consuming and costly task for mortgage and home equity lenders. But it’s also unavoidable. Making sure that proper hazard insurance is in place is as important to the loan process as verifying income and employment. All mortgage lenders verify precise aspects of insurance policies to ensure their collateral is properly covered. Additionally, if lenders wish to sell a mortgage loan on the secondary market, (to a GSE, for example), insurance requirements are so specific that a checklist is provided to help to guide lenders through the process.
The hazard insurance verification process not only costs time and money, it could even derail a loan closing. That’s because borrowers must supply proof that they have hazard insurance in place, such as a binder of coverage and payment status documentation. That opens the door to many potential problems:
- Borrowers might set up the wrong coverage
- The policy might contain errors
- Borrowers could present incorrect documentation — for example, a receipt from a canceled policy
- The borrower might neglect taking action to set up and/or supply hazard insurance information until late in the origination process, which could lead to a last minute urgency and potentially a missed closing date
In those situations, lenders may waste time on loans that won’t close as expected. Borrowers and the real estate agents who represent them may leave the closing table in frustration. Everybody loses.
Verification of Hazard Insurance (VOHI) from Equifax is designed to simplify the process for lenders and borrowers. It’s an efficient and cost-effective way to confirm that hazard insurance is in-force, accurate and properly updated with the necessary information. VOHI complements the comprehensive income and employment verification solutions also offered by Equifax.
VOHI helps eliminate hassle, streamlines processes, improves capacity management, reduces errors and maximizes efficiency through the combined powers of a cutting edge workflow engine and a dedicated team of experienced processors. The VOHI team at Equifax:
- Works with insurance agents to verify homeowners insurance is in force and facilitates the updating of insurance policies with appropriate loan and lien holder information
- Verifies that each policy includes essential details such as insured name; name of insurance provider; policy period and effective date; dwelling coverage; premium amount; replacement cost; and trust information
- Compares policy and loan information to ensure property addresses, loan number(s) and mortgagee clause(s) are present, accurate and occupying the appropriate lien position
- Ensures payment status documentation is included with the policy
- Requests insurance policy renewal documentation if the existing policy is set to expire before or within 30 days of the closing date
- Returns fully-audited insurance policy and payment status documentation to the lender
“VOHI lessens the burden of processing for mortgage and home equity lenders,” explained Eric Bloomquist, VP of Product Management at Equifax. “It also helps reduce stress on the borrower because they no longer need to go out of their way to obtain and provide documentation to show proof of insurance.”