Here's the dirt. Let's hear some commentary and limited cynicism.

I just found out, the hard way, that we had a weak link in our flood review process. We had a policy expire and it was not caught. That was the weak link. A new double gold ultimate sensitive procedure is in place now.

The policy has been expired now for 120+ days. We are waiting to hear from the customer. We have also sent the customer their 45 day notice.

1.) Can I forceplace now?

2.) Aside from protecting the customer and my collateral, will this be viewed favorably by regulators (even though we have a violation)?

GO!

I believe you have to wait until 45 days after providing notice to force place, even if you are beyond 45 days after the policy expired. I will try to find a citation in the Mandatory Purchase guidelines. I don't see how an examiner could see this as favorable... although your CMS caught it and you have put procedures in place to prevent it in the future, which is good.

Here is an excerpt from page 41:

If the borrower fails to purchase such flood
insurance within 45 days after such
notification, the lender or servicer shall
purchase the insurance on behalf of the
borrower and may charge the borrower for
the cost of premiums and fees incurred by
the lender or servicer. In an underinsured
situation, when the borrower and/or agent of
record refuse to cooperate with the new
lender, the loan should not be made. If the
loan has already been extended, the lender
should exercise recourse as provided under
the terms of the loan document.

The standard 30-day waiting period
established by the 1994 Reform Act does
not apply to force-placed policies; instead,
the 45-day period from time of notification
that a lender must grant to a borrower to
voluntarily obtain coverage is the only time
delay that controls.

emphasis mine

2.) Aside from protecting the customer and my collateral, will this be viewed favorably by regulators (even though we have a violation)?

I'm sure it will be, as they get to collect the new $2,000 in CMPs.

There it is! I was waiting on you Randy.

Here's the dirt. Let's hear some commentary and limited cynicism.

I think if:

1) this is an isolated instance
2) you have substantially revamped your processes
3) you have not been cited in the past for violations

I doubt the regulators will play the CMP card.