Are we required to maintain the same level of insurance when we force place or pay for the continuation of the customer's policy through payment of their escrow on their behalf? i.e. do we have to pay or force place for non-mandated flood insurance if the customer opted to have the insurance at origination, but after decides to cancel the non-mandated flood insurance? meaning do we have to force place for the non-mandated flood insurance?

We have heard that because it is considered to be hazard insurance under the new rule, we must continue the non-mandated flood coverage.

This does not make sense since the customer chose to have this coverage that is not required, by the bank or by FEMA. How can we force place for something that is not required??

Anything you do outside of flood insurance is totally based on risk and your loan agreements.

Ok, let's take out the escrow part of the question. What if the borrow has opted to purchase flood insurance on their own, they are in a SFHA "X" and we are not requiring flood insurance on this property, then at their insurance renewal they decide not to renew it, are we required to force place flood insurance according to the new force place rules on hazard insurance?

A training we attended stated that if the flood insurance is discretionary, the new force placement hazard insurance rules do apply.

I suggest finding a new training venue. The force place rules to not cover any voluntary insurance policies.

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.