A customer was escrowing their flood insurance on their 1st mortgage, when their 2nd mortgage was originated. During the annual flood review, it was found that the 1st mortgage had been padi off. Should the Bank now require the customer to escrow their flood insurance on the 2nd mortgage? No M.I.R.E. event has taken place. The 2nd mortgage was originated after 1/1/16. Thanks!

No MIRE - no action.

I disagree. §339.5(a)(3) states:

If at any time the bank determines a specific loan or policy exception no longer applies the bank must comply with the requirements to escrow for flood insurance.

You do need to require the escrowing of flood insurance on the (now) 1st lien loan.

Thanks David - missed that

Thank-you Dave!