The vendor claims that lenders face litigation from the borrower should he experience a loss and the home wasn't covered by a policy in an amount closest to the replacement value of the home.
The borrower doesn't purchase their own insurance (even though it's a requirement of the loan and required by law) and the borrower is going to sue you? Uhh, no.
The vendor that we use for forced-placed policies is telling us that industry practice has moved toward the lender insuring for the last known coverage amount that the borrower had in place.
He also claims the CFPB has been looking at this issue and may be taking action in the near future.
Your vendor must have a crystal ball that the rest of us have never seen. I feel like I'm pretty up on the industry when it comes to flood insurance. I've never heard of either of these.