We sent the 1st notice and also force placed ins on day 1. The plan was to wait and charge on day 46. Now before the 45th day we have proof of insurance from the borrower. Can we still charge the borrower for the "gap" insurance on the 46th day? If so, do we need to send the 2nd notice as a reminder before charge for the force placed ins?

They is no requirement to delay charging the borrower for 45 days, although most banks do, so they are not adding and subtracting premium charges all the time when proof of insurance shows up within the 45 day period.

My understanding is that you can charge the borrower for any days that their policy does not cover. Just can't charge them for days that overlap.

Thank you for the responses. Do we still need to send the second notification letter ifwe will be charging them for the gap days? It would seem confusing to the customer but the reg identifies a second notice prior to charging.

What second notice??

first notice 45 days before we charge for forced ins. The second (reminder notice) 15 days prior to charging.

That may be you policy, but that is not required by the regulation. One 45 day notice and you can charge them on day one.

(g) Force placement of flood insurance— (1) Notice and purchase of coverage. If a member bank, or a servicer acting on behalf of the bank, determines at any time during the term of a designated loan, that the building or mobile home and any personal property securing the designated loan is not covered by flood insurance or is covered by flood insurance in an amount less than the amount required under paragraph (c) of this section, then the member bank or its servicer shall notify the borrower that the borrower should obtain flood insurance, at the borrower's expense, in an amount at least equal to the amount required under paragraph (c) of this section, for the remaining term of the loan. If the borrower fails to obtain flood insurance within 45 days after notification, then the member bank or its servicer shall purchase insurance on the borrower's behalf. The member bank or its servicer may charge the borrower for the cost of premiums and fees incurred in purchasing the insurance, including premiums or fees incurred for coverage beginning on the date on which flood insurance coverage lapsed or did not provide a sufficient coverage amount.

Is there a difference in the timing /notices between forced flood and forced hazard?

RESPA excludes flood insurance from the definition of force-placed insurance.

1024.37—Force-placed insurance.*

(a) Definition of force-placed insurance. (1) In general. For the purposes of this section, the term “force-placed insurance” means hazard insurance obtained by a servicer on behalf of the owner or assignee of a mortgage loan that insures the property securing such loan.

(2) Types of insurance not considered force-placed insurance. The following insurance does not constitute “force-placed insurance” under this section:

(i) Hazard insurance required by the Flood Disaster Protection Act of 1973.