Secure Settlements Inc. (SSI) announced its partnership with RFIB Group Ltd. and certain underwriters at Lloyd’s of London to offer a new product that will insure lenders utilizing SSI’s ClosingGuard service against losses arising at the closing table. Endorsing the effectiveness of SSI’s suite of online risk management products for the vetting of closing agents, the group of insurance professionals is launching the Mortgage Settlement Insurance (MSI) Policy in support of the SSI program. The MSI Policy is designed to protect retail mortgage lenders that utilize SSI’s ClosingGuard closing agent vetting product against losses arising at the closing table from such perils as fraud, theft and documentation error. Coverage extends to warehouse banks and secondary market investors including GSEs, and may be available as well to consumers who are indemnified for losses at the closing table.
SSI’s 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. 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.
“Joining the effective risk mitigation practices of SSI’s closing agent vetting program with the sound underwriting practices of Lloyd’s has created a policy that we envisage providing unparalleled additional protection in an ever-evolving lending environment and giving lenders more certainty as they adapt to new landscapes," said Jeremy Brasier of RFIB.
Unlike other types of coverage or protection, 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.
“Based on the effectiveness and success of our ClosingGuard service, the new MSI Policy is able to offer more extensive coverage than other insurance products such as title insurance or closing agent errors and omissions insurance," SSI CEO and President Andrew Liput said. "This should become something all retail mortgage lenders consider as they evaluate acceptable levels of risk and practice sound lending.”
The Federal Bureau of Investigation (FBI) 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 percent in the past three years, according to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury.