If, despite these efforts, the discrepancy is not resolved, or in the course of attempting to resolve a discrepancy, a borrower or an insurance company or its agent is uncooperative in assisting a lender in this attempt, the lender should notify the insurance agent about the insurer’s duty pursuant to FEMA’s letter of April 16, 2008 (W-08021), to write a flood insurance policy that covers the most hazardous flood zone. When providing this notification, the lender should include its zone information and it should also notify the insurance company itself. The lender should substantiate these communications in its loan file.

the above is from the FDIC, I interpret that to mean if the borrower does not obtain the correct policy that we are required to force for the difference. Or does it mean something other than that? BTW, a LOMA was requested and rejected.

That's actually from the Interagency FAQs (#71). It's in reference to a zone discrepancy not about the amount of insurance. For instance, the lender believes the property is in a Zone A and the agent believes it's in zone B. What it's saying is if the agent and lender can't agree on a zone, the agent is to shut up and write the policy - no matter what they think is right. That's what the 4/16/08 FEMA letter stated.

IOW, the lender is to force the agent to write the correct policy.

Thank you!

I'm experiencing this same situation. Before the loan closed we had application for flood insurance and proof of payment. The flood zone on the flood insurance application matched our flood determination, so the insurance was approved and the loan closed. We received the flood insurance policy and the flood zone states X, not in a flood zone.

It is taking a while to get this corrected and I have not received a confirmation from the insurance company that it will be corrected. I have sent them FEMA letter W-08021 and FEMA map that clearly shows that the structure is in a flood zone. The only response we keep receiving from agent is "working on it"...

What do I do? Should I force placed because it taking so long to get this resolved. I feel like I have enough evidence to support that I have done my due diligence to get this corrected, but my concern is that examiners will ask "why didn't force place" ?

How long has it been since you received the incorrect policy?

We have faced this situation a couple times before.

I can't speak to how your examiners will react, but I will say that in both instances no progress was made in getting the customer to put pressure on the insurance agent or even do anything until we force placed insurance. Then "magically" the insurance agents were able to provide corrected policies very quickly.

The only party you have any leverage on is the borrower. If it takes force placement to gain his attention, then by all means start down that road.