Collateral and operational risks can be catastrophic risks which are unpredictable. In addition, compliance scrutiny from the FDIC, FEMA, CFPB, and Attorney Generals have forced lenders to re-think their collateral risk transfer policies and procedures for their Residential 1-4 and HELOC portfolios.
Similar scrutiny occurred on force placed auto portfolios in 1992. During this period, many lenders had large 9 figure class action lawsuits settled on behalf of the consumers. On June 3rd 1996 the National Association of Insurance Commissioners adopted a Model Act for all 50 states regarding the proper compliance regarding force placing auto borrowers. [read more]