What are they?
They are the insurance associated with mortgage loans, which lenders contract collectively, on behalf of their clients, to protect their guarantees (fire, earthquake, tidal wave, natural hazards, etc.) or the source of payment of the loans (discharge or invalidity ).
What is a credit institution?
Lending entities are banks, cooperatives, endorsable mortgage mutual administrator agents, family allowance compensation funds, and any other entity within its line of business granting mortgage loans.
Real estate companies will also be considered credit entities concerning the insurance contracted under housing lease contracts with a promise of sale.
For what type of mortgage loans?
For mortgage operations with individuals or legal entities when the use of the property given as collateral is residential or intended to provide professional services.
Lending entities must publicly bid for insurance associated with mortgage loans that simultaneously meet the following requirements:
- That the debtor bears all or part of the premium.
- That the beneficiary is totally or partially the credit institution.
- In the case of relief coverage for death or disability, and fire and complimentary coverage, such as earthquake and sea outflow.
What are the specific rules that regulate these insurances?
The individual and collective contracting of insurance associated with mortgage loans, minimum conditions that must be contemplated in the bidding conditions for these. And information that must be delivered to insured debtors is found in General Rule No. 330 of this Commission and SBIF Circular No. 3,530 regarding Banks, No. 147 regarding Cooperatives, and No. 62 regarding Bank Subsidiaries.
In addition, the Financial Market Commission issued NCG No. 331, which establishes the minimum conditions and coverage that insurance policies associated with mortgage loans must include.
Joint Regulation Highlights
- By public bidding, lending entities must take out the insurance associated with mortgage loans.
- These must be assigned to the bidder who presents the lowest price, including the insurance broker’s commission.
- The insurance price is the same for old debtors and new debtors and cannot be changed during the insurance term.
- Only insurance companies with a risk rating higher than BBB may participate in the trend.
- Commissions or payments in favor of the credit institution associated with these insurances cannot be stipulated.
- The right of debtors to contract their insurance individually with an insurer of their choice is maintained.
- It regulates the minimum service standards that the credit institution may require from the bidders of the tender.
- It establishes the obligation to inform the insured debtor in a predefined format.
What must be reported to the insured debtor?
The credit entities or whoever they establish in the bidding conditions must deliver complete and timely information to the insured debtors.
- Fire and complementary coverage
- They must submit a summary table of the range for damage associated with the mortgage loan and the criteria and terms that the lender will use to transfer compensation in the event of partial damage to the insured property. In other words, you must indicate the proportion that will be charged to the unpaid balance and the harmony that will be delivered to the insured debtor for the direct repair of the insured property.
- Relief
- The responsible entity must send the insured debtor a coverage summary chart.
- Standardized formats are established to deliver the information that must be sent to each insured debtor within the first 30 days counted from the beginning of the contract term.
Can these insurances be contacted individually?
Yes, individual insurance can be contacted at any time. It should be noted that the insurance is contracted individually and directly by the insured. The credit institution cannot demand from the debtor coverage or conditions other than those contemplated in the group insurance acquired by it, nor can it accept an individual policy with less coverage.
