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#1974565 - 11/05/14 10:02 PM 45 day notice for force-place
Frankie Flood
Unregistered

Does that apply to commercial borrowers with commericial properties and loans for commercial purposes? Does the flood reg establish its own 45-day notice requirement, in addition to that described in RESPA?

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#1974607 - 11/05/14 10:41 PM Re: 45 day notice for force-place Anonymous
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,754
Central City, NE
Flood Insurance is not a consumer regulation. It applies to all loans. So "yes" to your first 2 questions.

Flood requires you to notify people when you discover flood insurance is not adequate and then force place it 45 days later if they haven't purchased it.
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http://www.bankerscompliance.com

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#1974788 - 11/06/14 04:19 PM Re: 45 day notice for force-place Anonymous
Anonymous
Unregistered

But we are allowed to force-place earlier if we want, for our commercial borrowers, and charge them for it, as long as our loan agreement specifies that we will?

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#1974811 - 11/06/14 04:57 PM Re: 45 day notice for force-place Anonymous
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,754
Central City, NE
True, but . . .
You can't charge them until after 45 days. If they fail to get their own insurance, you can charge them for the full amount (back to when you force placed), but if they get their own.

Here's some information from one of our training manuals:

2. Fees and Charges:
The bank or its servicer may charge the borrower for the cost of premiums and fees incurred in purchasing the insurance. [§339.7] Specifically, the Biggert Waters Flood Insurance Act of 2012 states: [Interagency Statement 3/29/13]

a. Retroactive Charges:
Provide that the premiums and fees that a lender or servicer may charge the borrower include premiums or fees incurred for coverage beginning on the date on which flood insurance coverage lapsed or did not provide sufficient coverage amount.

b. Force Placed Policy Termination & Refund:
Require the lender or servicer, within 30 days of receiving a confirmation of a borrower’s existing flood insurance coverage, to terminate any force-placed insurance and refund to the borrower all force-placed insurance premiums and any related fees paid for by the borrower during any period of overlap between the borrower’s policy and the force-placed policy....

c. Borrower Policy Confirmation:
Require a lender or servicer to accept as confirmation of a borrower’s existing flood insurance policy a declarations page that includes the existing flood insurance policy number and the identity and contact information for the insurance company or agent…
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David Dickinson
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#1974845 - 11/06/14 05:59 PM Re: 45 day notice for force-place Anonymous
Anonymous
Unregistered

Confused then. Why do we have new RESPA rules for force-placed insurance (re: that we can't charge until day 45 on consumer loans), if this existed in Flood regs all along?

Are you saying that RESPA makes it true for consumers, and that Flood regs make it true for both consumers and commercial?

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#1974847 - 11/06/14 05:59 PM Re: 45 day notice for force-place Anonymous
Anonymous
Unregistered

(And thank you for all the great info so far!)

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#1974851 - 11/06/14 06:08 PM Re: 45 day notice for force-place Anonymous
Anonymous
Unregistered

This is from a Jan 2014 webinar from a vendor, slides posted online:

"22. Do these rules apply to business loans secured by a principal dwelling? No, the force-placed insurance rules do not apply to business purpose loans: loans for business, commercial or agricultural purposes. It does not matter that the business purpose loan is secured by a principal dwelling. 12 C.F.R. §§ 1024.5(b)(2); 1026.3(a)(1)

23. Should similar notices be sent for commercial properties? Business purpose loans are not subject to the force placed notice requirements under the CFPB rules. A business loan is defined as the extension of credit primarily for a business, commercial or agricultural purpose. 12 C.F.R. §§ 1024.5(b)(2); 1026.3(a)(1). However, it is a best practice to follow a standard 45 day (two notices) letter-cycle for business loans."

http://www.wncfirst.com/NEWS/WNC_Webinar_qa.pdf

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#1974917 - 11/06/14 08:35 PM Re: 45 day notice for force-place Anonymous
Dani York, CRCM Offline
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Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
Originally Posted By: Anonymous
Confused then. Why do we have new RESPA rules for force-placed insurance (re: that we can't charge until day 45 on consumer loans), if this existed in Flood regs all along?

Are you saying that RESPA makes it true for consumers, and that Flood regs make it true for both consumers and commercial?


The RESPA force-placement rules are for HAZARD insurance, not flood insurance. They are 2 separate sets of rules/standards.
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I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

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#1974946 - 11/06/14 09:44 PM Re: 45 day notice for force-place Anonymous
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,754
Central City, NE
What Dani said. smile
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David Dickinson
http://www.bankerscompliance.com

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#1975070 - 11/07/14 03:27 PM Re: 45 day notice for force-place Anonymous
Anonymous
Unregistered

Oh. Derp. Thank you!

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