1. We currently have some customers (non-escrowed) who pay their insurance monthly or quarterly to their agents, in the event that we get a cancellation notice for non-payment, we would start the 45 day notice and this time, but can we pay the insurance agent for the customer or are we required to force-place coverage through our vendor?
We would not charge the customer's loan until the 46th day after we sent the letter.

We interpret that the regulation, as well as our Mortgage Instrument, allows us to pay the premium due to the agent and avoid the force place process as long as the policy is being cancelled for non-payment. At closing our non-escrowed borrowers sign a document that states if they do not pay their taxes or insurance that we will pay them and set up an escrow account for future payments. Our mortgage allows us to advance the funds to principal but we let the escrow account be in the negative and recoup the funds over the next 12 months.

You should consult your compliance officer or attorney to determine your policy for this.

it has been our experience that insurance companies will not accept the premium from the bank if it is non-escrowed. The borrower is there customer, not the bank.

Even if you could get some insurance company to accept the payment on behalf of the borrower, IMHO you create exposure since you will be renewing for some borrowers but not all. A slippery slope.....