Thanks rlcarey. I appreciate all your input. I try and research the answers before entering the questions here on BOL, but sometimes the regs are not as clear as the layman.
I did send the question to the training venue to clarify what they stated. They re-considered their original answer to state,
" If a property is not located in a flood zone, but the bank has required it anyway (which you are permitted to do) then that insurance would be covered under the new force placed hazard insurance rule." and "If a property is not located in a flood zone, but the borrower has opted to purchase flood insurance on their own, (not required by the bank), then the borrower may cancel the insurance and you would not be required to force place it." This is now very clear to me and makes more sense.