Insurance Q&A with the Mortgage Loan Servicing Department

Our loan servicing department fields thousands of phone calls from partners and borrowers all over the country. Recently the team has handled several questions about insurance-related issues, and we thought it might be helpful to share those with a broader audience. 

Yes. Flood insurance must always be escrowed. This requirement is contained in a 2015 rule issued jointly by the FDIC, OCC, NCUA and several other regulatory bodies. The rule requires credit unions, community banks, or servicers acting on their behalf to escrow flood insurance premiums and fees for mortgage loans made on or after January 1, 2016.  

Because of this rule, an escrow for flood insurance must be established at closing. This is the case no matter the LTV. And, flood insurance must be escrowed even if property taxes and/or homeowners insurance are not. 

Insurance claim checks are often made out to both the borrower and the mortgage company/servicer. This is standard practice in the insurance industry. Essentially, the insurance company is issuing payment to anyone who has a financial interest in the property. This practice is designed to ensure that the insurance funds are used to make the necessary repairs associated with the claim. 

The check cannot be deposited into an account until all parties have signed it, including the mortgage company/servicer.

If your borrower has received an insurance claim check made out to both them and Servion, here is what they should do:

• Checks of $40,000 or less: Send the check and adjuster’s summary to Servion. Servion will endorse the check and return it to the borrower.
• Checks of more than $40,000: Send the check, adjuster’s summary, and a contract for repair to Servion. Servion will retain the check and manage disbursements for repairs.

Checks and related material should be sent to:

     Servion, Inc.
     Attn: Loan Servicing
     500 Main Street
     New Brighton, MN 55112

Get in Touch with Servion’s Servicing Department

Our Servicing department is here to help! Our phone number is 1-800-766-5626, or you can visit this page to find the email address most relevant to your question.