I know we have to send the 45 and 30 day letters to a customer prior to charging for force-placed insurance according the the new Mortgage Rules...I have looked at the Regulation and I can't find anything pertaining to; What if the customer contacts the Bank to let them know the insurance will lapse? Does the letters still have to be sent?

I would still send them and follow the procedures stated in the reg.

yes. I have not seen any exception allowing the bank to accelerate force placement, even if the borrower requests this.