I agree that there is no requirements for Life of Loan monitoring on any loan (it just makes life easier, as noted) and there technically is no requirement to monitor purchased loans.
However, on purchased loans it is important to pay attention to the Interagency Q&A:
2. Does the Regulation apply to loans purchased from others?
Answer: No. The Regulation lists certain events that trigger its
requirements: making, increasing, extending or renewing a designated
loan. The purchase of a loan is not an event that requires the
purchaser to make a new determination at the time of purchase. However,
if the lender becomes aware at some point during the life of the loan
that flood insurance is required, then the lender must comply with the
Regulation. Similarly, if the lender extends, increases or renews the
loan, the Regulation applies.
Kathleen Blanchard CRCM "Kaybee"
CRA/HMDA Maps,Analysis,Consulting,Geocoding,Compliance Services