Force Placed Insurance Notices Answer by Lucy Griffin, BOL Guru Guru BIOS
Question: Is there any specific Federal regulations regarding forced place insurance? Any required disclosures that need to be sent to the homeowners? If so, which ones and how many? Where can I find more info regardiong the Federal and State requirements?
Answer: Forced placed insurance is most common with flood insurance. In this case, the law requires you to place the insurance if the customer fails to purchase or renew the insurance. The flood insurance regulations of each agency provide notification procedures -- content and timing. If you follow those, you should be OK.
Whether the insurance is for flood or any other hazard, your power to force place should be provided for in the contract (note). There have been a number of lawsuits about lenders placing insurance. You prevent such suits by making the powers and obligations clear in the loan contract.
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