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#1755772 - 11/07/12 01:52 AM Force place - day 1
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I've heard from other institutions that it would be wrong to force place on day 1 even though the customer wouldn't be charged until day 46 if they didn't get their own. This would protect the bank in the event of flood during those 45 days. What would be wrong with this if the customer isn't charged?

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Flood Compliance
#1755800 - 11/07/12 01:36 PM Re: Force place - day 1 HR Banker
rlcarey Online
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First, you are covered for 30 days as the mortgagee under the old policy.

"When" you charge them is not the issue. The current outstanding issue is whether you can charge them anything for the first 45 days. The lanaguage in the DFA would seem to disallow it.
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#1756163 - 11/07/12 07:20 PM Re: Force place - day 1 rlcarey
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So if the flood policy expired on June 1 and they have flood damage June 25 are you saying their insurance company will still cover them even though they haven't received payment? What if it floods during that 15 day window between the 30 & 45 day?

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#1756164 - 11/07/12 07:23 PM Re: Force place - day 1 HR Banker
Dani York, CRCM Offline
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The 30 day grace period after expiration covers the property, so in your example the flood on the 25th would be ok. The grace period is to allow time for the policy holder to pay the renewal premium.

The gap between days 30 and 45 is your concern. If the property were to flood on one of those days, there is no insurance coverage. This is the reason many banks either have a GAP policy for the interim before forceplacing, or go ahead and force during the notification period and EAT the premium for those days.
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#1828261 - 06/27/13 04:24 PM Re: Force place - day 1 Dani York, CRCM
morirse de risa Offline
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First time force-placing flood, so bear with me:)

We have sent the 45 day letter and have also sent in a check for the annual flood insurance premium so there is no lapse in coverage. We were planning on charging the customer for the premium on day 46, but how do we figure out how much the first 45 days cost so we don't charge this amount to the customer? All we have is an annual premium amount.

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#1828278 - 06/27/13 04:35 PM Re: Force place - day 1 HR Banker
Katy Auditor Offline
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My guess would be ($annual premium/365) x 45.
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#1828334 - 06/27/13 05:40 PM Re: Force place - day 1 HR Banker
RR Joker Offline
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Unless I'm totally misunderstanding, you CAN charge the entire premium now on day 46.
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#1828435 - 06/27/13 07:28 PM Re: Force place - day 1 HR Banker
rlcarey Online
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and have also sent in a check for the annual flood insurance premium

Who's flood insurance and who did you send it too? Do you mean you paid the owner's current policy premium?
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#1830886 - 07/08/13 05:40 PM Re: Force place - day 1 HR Banker
morirse de risa Offline
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Yes, we paid the owner's current policy premium.

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#1830921 - 07/08/13 06:20 PM Re: Force place - day 1 HR Banker
rlcarey Online
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Then, you didn't force place insurance. You did them a favor and paid their premium for them. How you might collect that money now is probably a question for your legal counsel after review of your loan agreement.
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#1830925 - 07/08/13 06:22 PM Re: Force place - day 1 HR Banker
Kathleen O. Blanchard Offline

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And bear in mind that the customer can cancel that policy and get a refund of the bank paid premium.
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#1830931 - 07/08/13 06:24 PM Re: Force place - day 1 HR Banker
morirse de risa Offline
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I'm confused. I thought this was the method some banks used if they didn't want to have the "gap" in flood insurance b/w the 30 and 45 days?

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#1830940 - 07/08/13 06:28 PM Re: Force place - day 1 HR Banker
rlcarey Online
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Paying the customer's personal policy premium is not force placing insurance. You are acting as if the customer has an escrow account without an escrow account. As Kathleen mentioned - the customer can cancel that policy and receive the refund - then you are going to be out two years of premiums for one year of coverage when you have to place a real force placed policy in place.
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#1831369 - 07/09/13 07:05 PM Re: Force place - day 1 HR Banker
morirse de risa Offline
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Since we already paid the premium for another year, can we add the entire premium amount to the customer principal balance on day 46?

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#1831405 - 07/09/13 07:50 PM Re: Force place - day 1 HR Banker
Katy Auditor Offline
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I could be wrong, but if you are actually able to add the premium back to the principal balance, why would you have to wait until day 46? You paid their premium. You didn't force place insurane best that I can tell, so there shouldn't be a lapse from day 30 to day 45.
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