Mortgage, title insurers must file disaster plans with New York

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Mortgage and title insurance companies licensed in New York need to file disaster response plans this year in line with increased state attention to business continuity planning.

The New York Department of Financial Services previously directed property and casualty companies to fill responses to a pre-disaster data survey by May 19, and most insurers need to respond to related online questionnaires by June 29. But the updated guidance "now also requires mortgage insurers and title insurers to file a disaster response plan and questionnaire" by Sept. 28.

“When disaster strikes, as it did when Hurricanes Maria and Irma devastated Puerto Rico and the Virgin Islands last year, it is important for all insurers to be able to respond quickly and to be able to continue operations to ensure they can serve the increased needs of consumers resulting from the emergency, whether it’s a storm, a data breach or a terrorist attack," said New York Financial Services Superintendent Maria Vullo in a NYDFS press release.

Private mortgage insurers, who primarily provide coverage in the government-sponsored enterprise market that dominates the home lending business, already must address business continuity planning as part of GSE eligibility requirements and are examining whether New York's requirements are appreciably different.

"USMI and our member companies are reviewing New York’s updated disaster response and recovery plan requirements for insurers," USMI President Lindsey Johnson said in a statement emailed to National Mortgage News.

"USMI member companies have robust and comprehensive business continuity and disaster recovery plans in place," she said. "Business continuity planning is required as part of the Private Mortgage Insurer Eligibility Requirements set by the government sponsored enterprises and approved by the Federal Housing Finance Agency and are a topic that are routinely covered during audits with Fannie Mae and Freddie Mac.”

New York's oversight of business continuity planning tends to be more detailed than the federal guidance some other states look to in their licensing requirements.

Some other states are using the Federal Financial Institutions Examination Council's framework for their state licensing review process, and Massachusetts also has "put a lot of focus on having a well-documented business continuity plan," said John-Thomas Gaietto, executive director of technology services at mortgage industry consultancy Richey May.

"We are definitely seeing other states look at this, but definitely not to the degree as New York. The reason being is that New York had some significant financial damages from hurricanes that have come up to the Northeast," said Gaietto. While Irma and Maria did more damage in the Southeast, the Northeast has suffered damage from past storms as well that the recent severe hurricanes in other parts of the country call to mind.

"It's probably a handful [of states doing this] from what we've gotten direct feedback on," he said. "But I think we're going to see that evolve."

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Business continuity Disaster recovery PMI State regulators NYDFS Richey May Fannie Mae Freddie Mac New York Massachusetts