Kirchmeyer & Associates Inc., a Buffalo, N.Y.-based appraisal management company, is now offering its clients collateral valuation insurance which protects them against default losses including repurchase expenses. Eligible loan types include first and second mortgages as well as home equity lines of credit.
Coverage is provided through an underwriter working with Group9 Insurance Solutions, Wrightstown, Pa.
Kirchmeyer said it wants to provide assurance to the investment community that the valuation will not ultimately impair the performance of the loan.
This policy protects the financial institution against an actual financial loss if the warranted collateral value is ultimately determined to be in excess of the original appraised value. When a loan defaults, forecloses or a loan repurchase demand occurs and a valuation inaccuracy is discovered, the insurer steps in and pays the claim.
Kirchmeyer is not the first AMC to offer this kind of coverage. In June 2010, Troy, Mich.-based DartAppraisal.com began offering a warranty guarantying mortgage lenders and investors against potential loss for default and disclosure due to valuation inaccuracy.
