MPPP GUIDELINES &
REQUIREMENTS
ADDENDUM #1
INITIAL PORTFOLIO REVIEW LETTER NOTIFICATION PROCESS
Once it has been determined by the lender/servicer or its representative that flood insurance is needed on mortgages in their portfolio, and there is no evidence of flood insurance, and it decides to use FIA’s MPPP to assist in bringing the lender’s portfolio into compliance with flood insurance, then the following notification process must be used.
This process will consist of three notification letters. Each letter will contain certain messages, at a minimum, in the body of the letter. The lender/servicer (or their authorized representative) may add their own messages, make minor editorial modifications to the messages to conform to the style and practice of the WYO company or lender and structure the letter to their liking, but they may not alter the meaning or intent of the messages listed here for any of the letters.
Each letter will contain mandatory messages on one or more of the following items:
The requirements of the Flood Disaster Protection Act of 1973
Reminding the insured of the previous letters sent that resulted in the current flood insurance policy
The high premiums on the current policy
Potentially inadequate coverage limits
Coverage limitations, if any
The options available to the insured
INITIAL NOTIFICATION LETTER TO MORTGAGOR
The first letter is to be issued after the review of the lender's portfolio reveals the need for flood insurance coverage and the absence of it. This letter must contain, at a minimum, the following messages:
“The Flood Disaster Protection Act of 1973, a Federal law, requires that flood insurance be purchased and maintained on mortgage loans for buildings (and their special contents, if appropriate) for the life of the loan for buildings located in a Special Flood Hazard Area shown on a map published by FIA. This applies to such loans from lending institutions that are under the jurisdiction of a Federal regulatory agency or instrumentality.”
“We have determined that your property (building), on which we hold the mortgage loan, is located in the SFHA and, therefore, you are required by law to have a policy of flood insurance on that property.”
This letter must then include language advising the mortgagor that in the event they wish to challenge the zone determination, they should provide written factual evidence supporting their challenge obtained from a community official, registered engineer, architect or surveyor, stating the specifics of the location of the building and the reason for their challenge.
The lender/servicer is reminded that since the Act places the responsibility of determining the flood zone location of each mortgaged property on the lender/servicer, he cannot discharge that responsibility by simply obtaining some form of self-certification from the mortgagor. If the lender wishes to change its original determination of the mortgagor’s property based upon information submitted by the mortgagor, the lender/servicer must convince itself, after reviewing that submission, that its original determination was in error and make any such change based on the review. He should not simply accept unsubstantiated allegations, from whatever source, as to the building’s flood zone location. The ultimate responsibility for making such determinations under the statute rests with the mortgagee, not the mortgagor.
“There is no evidence in your mortgage loan file of your having a flood insurance policy on your property. In case this information is in error please contact us at __________.”
“If you do not have a flood insurance policy on this property, you may wish to contact your local insurance agent (or WYO company at __________).”
“If you do you not respond within 45 days of this letter, either providing evidence of a flood insurance policy in effect on this property, or requesting that we provide you with such coverage, the necessary flood insurance coverage will be provided for you. In that event, since certain insurance underwriting information about your property that is necessary to determine the appropriate flood insurance rate for your policy would not have been obtained, due to your not responding, the Federal Government’s Mortgage Portfolio Protection Program’s flood insurance rates will have to be used. These rates may be considerably higher than those that could be obtained for you if you respond to this notice.”
This letter, or an attachment, must also include such other information as:
The name of the lender/servicer
The mortgage loan number
The address of the property in question
The flood zone in which the property has been determined to be located
The amount of flood insurance being required
Coverage limitations (if any)
SECOND INITIAL NOTIFICATION LETTER
This letter will be sent 30 days following the first initial notification letter if no response has been received from the mortgagor. It will contain, at a minimum, the following messages:
“About a month ago you were notified that Federal law requires all mortgages, such as yours, on properties determined to be located in a Special Flood Hazard Area, to be covered by a policy of flood insurance.”
“That letter mentioned that if you did not respond positively within 45 days from that letter, it would be necessary to obtain a policy of flood insurance for you.”
“This is to remind you that since you have not responded to the earlier notice as yet, and if you do not respond within the next fifteen days (or the actual expiration date), flood insurance, as mentioned previously, will be obtained on your property, on your behalf.”
“In the event that you do not respond and the coverage must be obtained as mentioned, the cost of that coverage may be significantly higher than the premium that you could obtain if you were to contact your local insurance agent (or WYO company at __________).”
THIRD & FINAL INITIAL NOTIFICATION LETTER
This letter must be sent to the mortgagor accompanying the flood insurance policy Declarations Page.
This letter must be sent as soon after the end of the 45 day notification period as possible, if no positive response has been received to the two previous notification letters. It must contain the following messages, at a minimum:
“This letter is to inform you that a policy of flood insurance has been obtained on your behalf, to cover the mortgage on your property, as required by the Flood Disaster Protection Act of 1973.”
“You have been notified on two previous occasions explaining the circumstances surrounding your need to have flood insurance coverage and explaining your options, but to date no response has been received.”
“Attached is the flood insurance policy purchased on your behalf and its accompanying Declarations Page that explains the amount of coverage purchased on your behalf, its cost, some limitations to that coverage, and the options you may still wish to exercise to obtain similar coverage, but typically at a significantly lower cost.”
“If you purchase another flood insurance policy and notify us, or contact us to request that we purchase a substitute policy under the NFIP for you, we will cancel this policy and issue a refund for the unearned portion of the premium, if we deem that the other policy is acceptable to satisfy the requirements.”
Please note: This information is provided as a courtesy by Loan Protector. While correct to the best of our knowledge, we make no guarantee or warranty as to its accuracy, and will not be liable for any damages resulting from its use. In case of any conflict with federal, state or local statute, or NFIP guidelines or regulation, such law, regulation, or guideline takes precedence over the information contained herein. Please have your compliance and/or legal staff provide final interpretation on all NFIP regulations.