Hopefully someone can help me find the regulation that states we can not add the amount of the forced placed insurance to the principal of the loan.

You can make it a policy that you would not add premiums to the loan amount, but I don't think this is spelled out in any reg.

Also check the loan contract. Does it address what you can do in the instance of FP insurance?

The loan contract says we have right to force place but does not deal with how we can do that. I thought some where in the regulation it prohibits stacking fees on the loan but I may be wrong in this as I can not find specfic language for this.

Check your mortgage/deed of trust document as well.

thanks for the help

And don't forget state law, which may have a provision relating to your question.

Just remember that adding insurance premiums to the loan balance without re-amortizing the loan can present catastrophic results for both the borrower and the bank.