This is an area that the regulators have created much confusion - even when they try to clarify it. Below I have cut/pasted from our outline on this topic:
1. Prior to Closing:
Must be delivered to the borrower(s) and to the servicer if applicable, within a “reasonable time”, before the completion of the loan. [§339.9(c)]
2. Reasonable Time:
The regulations do not establish a fixed time period in which a lender must provide the notice. What constitutes a reasonable time will necessarily vary according to the circumstances of the particular transaction. [MPFIG – page 34 and Federal Register /Vol. 74, No 138 – page 35930]
3. Regulatory Guidance:
The Agencies generally continue to regard ten days as a “reasonable” time interval.
[Federal Register /Vol. 74, No 138 – page 35930]
When you read the Fed Register comment (#3), it makes it sound like ten days is still required. That's why the FDIC examiners told you it was a best practice.
Here's my answer: When you increase, renew, extend (not make) a loan that already has flood insurance in place, you need to give a new notice. BUT you don't need to delay closing to meet any number of days. Get the borrowers the notice as soon as possible and make sure the insurance is adequate. If so, close the loan. That could be in 1 day if everything lines up.