Skip to content
BOL Conferences
Thread Options
#1921112 - 05/07/14 10:11 PM Force Place Renewal
jlroberts Offline
Diamond Poster
jlroberts
Joined: Sep 2009
Posts: 1,601
Ohio
We FP with a private company (Lloyd's). Upon renewal are we required to send the 45 day letter on the expiration date of the FP policy or can we treat that policy just like any other policy and pay the premium when we get the renewal bill? All I find in the Interagency guide is when the policy has already expired. These policies never expire if they are paid, right?

Return to Top
Flood Compliance
#1921122 - 05/08/14 01:09 AM Re: Force Place Renewal jlroberts
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
You are required to give them notice every year just like a policy they buy. You can automatically renew it, but you owe them the 45-day letter and can't charge them until the 45 days expire.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1921346 - 05/08/14 05:00 PM Re: Force Place Renewal jlroberts
nu2regs Offline
Member
Joined: Mar 2013
Posts: 77
Have a question along the same line:

Does that mean for every year the force placed insurance is renewed, the Bank will need to eat the 45 days of premium?

Return to Top
#1921434 - 05/08/14 06:36 PM Re: Force Place Renewal jlroberts
MassCompliance4 Offline
New Poster
MassCompliance4
Joined: Sep 2009
Posts: 24
MA
My understanding is that with the passage of the B-W Reform Act, while the bank still can't force place until day 46, they are now allowed to charge for the entire time back to the expiration of the original policy. So you place it on day 46, back-date the effective date to end of the last policy and now you can charge the borrower for the premiums back to that effective date as well.

And when/if the borrower comes back to you with proof of having obtained coverage, you must cancel your force place policy and refund all overlapping premium amounts and you must do this within 30 days of receipt of this proof of insurance.

So, no eating any portion of premiums.

Or do we have to wait for the magical "implementing regulations" that have yet to be released??
Last edited by MassCompliance4; 05/08/14 06:37 PM. Reason: Added my question.
Return to Top
#1921457 - 05/08/14 07:05 PM Re: Force Place Renewal jlroberts
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
I see one thing wrong with the above, Mass. YOu can FP day one of lapse, you just can't charge until you have gone through the notification process and then charge day 46 (back to day 1).

What good is 'back-dating' insurance...if an event happened during that time, I guarantee you no one would get paid. wink
Last edited by RR Joker; 05/08/14 07:05 PM.
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

Return to Top
#1921472 - 05/08/14 07:25 PM Re: Force Place Renewal jlroberts
MassCompliance4 Offline
New Poster
MassCompliance4
Joined: Sep 2009
Posts: 24
MA
It is funny you should say that because this is what I thought too...so I asked the ABA. I specifically pointed to their own Staff Analysis of the BWA that says while banks can now charge for ALL premiums on force-placed flood back to the expiration date, they still can't actually "place" the policy until day 46. I said with the fact that we now have to refund any overlap, why can we not actually place the darn insurance so EVERYONE was covered.

Their response to me was (paraphrasing) that the BW was not clear and subject to interpretation. If you review their document from November 19, 2012 they specify the need for the regulators to clarify and revise the Proposed Q&A #62 that dealt with this question. Section 100244 of BW supposedly clarifies this but seems to require the agencies to write a regulation to "make it so number one."

So, yeah now, that I have reviewed my notes, I have answered by own question about needing to wait for magical regulations.

What do others think of this issue - what feedback have you all gotten?

Return to Top
#1921528 - 05/08/14 08:34 PM Re: Force Place Renewal jlroberts
Everest Offline
Gold Star
Joined: Jan 2012
Posts: 301
I am jumping in on this in hopes that someone will give me some direction as to where I can find in the act the information stating the requirement to provide a 45 day letter when the force-place policy expires.

Any guideance would be appreciated as I have been hunting and pecking for it and I know its out there somewhere.

Return to Top
#1921597 - 05/08/14 11:39 PM Re: Force Place Renewal jlroberts
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
A forced place policy is no different than one that the borrower procures. You have to notify them annually that the force placed policy has expired, that these policies typically cost much more than it would if they obtained one directly, and they have 45 days before they get charged for a renewal. If you are looking for something that specifically says this, you need to be looking between the lines.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1922908 - 05/14/14 02:45 AM Re: Force Place Renewal jlroberts
jlroberts Offline
Diamond Poster
jlroberts
Joined: Sep 2009
Posts: 1,601
Ohio
I heard back from our compliance vendor. They said there is no clear guidance on renewing a FP policy. We send a letter 45 days before the policy expires letting them know that the FP policy is about to expire and if they do not provide proof of coverage within 45 days the FP policy will be renewed. We pay the premium from their escrow account upon renewal so that there is no lapse in coverage. They said that was a good practice because it satisfies the 45 day notification and the policy never lapses so coverage is always in force. We are going to continue our current procedures based on that information.

Return to Top
#1922912 - 05/14/14 02:54 AM Re: Force Place Renewal jlroberts
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
They said that was a good practice because it satisfies the 45 day notification and the policy never lapses so coverage is always in force.

That's great as long as they also agree to pay the $2,000 fine for each occurrence if your regulator does not agree with them. Call you EIC.

No one is suggesting that there ever would be a gap in coverage or the bank eat any premiums. You can renew the policy on day 1, send them the 45 day letter and charge their escrow account on day 46. This is no different than what you would do if they let their own policy expire.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1922916 - 05/14/14 03:07 AM Re: Force Place Renewal jlroberts
jlroberts Offline
Diamond Poster
jlroberts
Joined: Sep 2009
Posts: 1,601
Ohio
I hear ya Randy! I always second guess our flood procedures at exam time. It's so frustrating. Our last flood exam was fine so hoping this one is to. Fingers crossed...

Return to Top