Can the lender force place the flood insurance prior to the loan closing date so that he can proceed with the loan closing?
No.
d. Insurance Required at Loan Closing
A designated loan must have flood
insurance as a condition of closing. If a
borrower will not voluntarily obtain
coverage, the lender must deny the loan. A
lender cannot accept a borrower’s assurance
that he or she will obtain coverage in the
future or grant the lender indemnity while he
or she seeks coverage. Closing a designated
loan without coverage in place constitutes a
violation of the regulation.
By enacting this portion of the law,
Congress intended lenders to have clear
authority to force place; under certain
circumstances, they are obligated to force
place. The force placement of coverage is
designed for use at any time during the term
of a loan in uninsured and underinsured
situations; it is not intended for use at loan
origination. If a borrower refuses to obtain
flood insurance coverage as a condition of
obtaining a loan, the loan is deficient and is
not to be made.
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The opinions expressed are mine and they are not to be taken as legal advice.