If a loan account has escrow and we receive a notice of additional payment needed on the policy to maintain the flood coverage amount that the customer obtained right before loan origination, is it ok to just pay the additional premium due out of the escrow account? or must we start the force placement process for the shortage by sending the 45-day notice and force placing for the deficiency?

Thanks in advance.

Pay it and run a short year analysis. By having the escrow account you have a duty to make sure the existing policies are paid. I assume you originally accepted a policy that was mis-rated?

There seems to be some deficiencies with the Flood Insurance agents and even the person who does the survey and issues the flood elevation certificates in our area. So we frequently end up with a policy relied on at closing that appeared to be adequate only later to find out that it is being re-rated because of one problem or another.

Do you recommend a short year analysis even if the dollar amount is small? We require a two month cushion so in most cases it will not cause a shortage at the end of the year.

Its unfortunate but its what we have

If it is not that much, I would just let it ride until the annual analysis.

Great, thanks so much!