When One Hand Does Not Know What The Other Is Doing

December 11th, 2012

When one hand does not know what the other one is doing, look out. I have found that one miscommunication can domino into dozens of other issues, which systemically can throw off numerous individuals in a corporate organism for a lengthy period of time. What exactly do I mean?

I will give you an example that just happened the other day. I had a loan that was approved with a few seemingly minor loan approval conditions. My client was a homebuyer who was buying a condominium. One of the loan approval conditions was that we needed to see a copy of satisfactory HO6 insurance. The buyer contacted an insurance agency and sent us over the insurance policy to show us that she was covered with the necessary insurance. The coverage was adequate and everything appeared fine, at first. My closing department sent out the closing documents to the title company to prepare for settlement which was the next day.

However, the morning of settlement, we discovered language in the insurance policy that seemed odd. It sounded ominous. We had someone from the insurance broker comment, and that comment is below:

“Here is the information on the insurance policy placed through Lloyds of London. They are a non-admitted carrier licensed to do business in in Washington, DC. Many states will allow non-admitted carriers to transact business in their state where there is a special need that cannot or will not be met by admitted carriers. Non-admitted carriers are usually referred to as ‘surplus’ or ‘excess lines insurers.’ Non-admitted carriers are not regulated in that state and do not contribute to the State Guaranty Fund, which protects policyholders from the bankruptcy of its insurance carrier.”

One person at the bank (who was not in the underwriting department) that we were funding the loan with suggested that if the insurance carrier went out of business, and since they don’t contribute to the State Guaranty Fund, that the lender would not find the insurance carrier satisfactory. Keep in mind, that the insurance carrier was Lloyd’s of London, they have been in business since 1774! But this one errant suggestion that the policy was not acceptable set off a chain of events that wasn’t to be believed.

It took about six different parties from 9:00 AM to 1:30 PM focusing on almost nothing else, to solve the riddle. Ultimately the underwriter at the bank said the following, “I am pretty sure that Lloyd’s of London will still be around well into the future, and that we will find this policy satisfactory. Please proceed with the loan.” The comedy of errors that took place over the course of almost four and a half hours by six different parties to determine one simple thing is not something that I can begin to describe in a blog. It would take a chapter in a book.

People were calling each other repeatedly, people were on hold for one party while being called by that party on another line, one department wasn’t talking to another department, one entity was not talking to another entity that may have been helpful because they were busy talking to someone else who did not have the solution, people started to offer opinions that were not founded on fact, some people emailed, some people used the phone, and some people texted. It was an absolute mess, a real circus. After 4.5 hours and the efforts of 6 people, which is a collective 27 hours, the loan was pushed through and settled.

The point of this blog is to show how one wrong thought, one errant statement, or one bit of misinformation can eat up a hunk of the day, or even much longer. So the moral of the story is everybody should know what they are doing, only make a statement if they know that it is 100% accurate, and the world would be a better place.

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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