We need to know how to determine how much force-placed insurance to apply to a real estate loan? Do you subtract the value of the land from the balance of the loan or do you subtract the value of the land from the appraised value? Then if the balance is less do you force place insurance for the balance of the loan? Thanks for any help.

You should post this in the Flood Insurance forum.

I'm asking about hazard insurance not flood insurance.

Most banks will force place for the amount they were requiring the borrower to maintain. There is no rule or regulation at this point.

Generally, you would want to purchase hazard insurance (with replacement cost coverage) for the value of the structure. If you only insured your balance of lets say $20,000, and the value of the home was $100,000, the home would be seriously underinsured, and the insurance company may ony pay 20% of damages in the case of a loss, in this example due to only it only being covered for 20,000 or 20%, the actual policy probably describes what are the consequencies if the structure is under insured. So finding out from the insurer up front how coverages are affected if underinsured would be a good idea.

And the bank should already know that or they were not requiring enough insurance in the first place, prior to needing to force place.

Sorry for the misunderstanding.