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#2250222 - 03/08/21 08:21 PM Property Now in Flood-Force Place Date?
MLundy Offline
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Posts: 25
We have an older mortgage where the property was not in flood at origination, but is now in a flood zone. We sent a 45 day letter to the borrower, but they did not provide flood insurance. Do we force place on the 45th day, or do we need to backdate to the date of the new determination (day 1 of 45)?

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Flood Compliance
#2250233 - 03/08/21 10:07 PM Re: Property Now in Flood-Force Place Date? MLundy
rlcarey Online
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rlcarey
Joined: Jul 2001
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Galveston, TX
Day 45 for a brand new policy requirement.
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#2250248 - 03/09/21 03:39 PM Re: Property Now in Flood-Force Place Date? rlcarey
MLundy Offline
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Thank you!!

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#2253268 - 04/30/21 02:00 PM Re: Property Now in Flood-Force Place Date? MLundy
dutchbltz Offline
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By any chance, could you direct me to where the specific guidance is on this matter?

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#2253270 - 04/30/21 02:10 PM Re: Property Now in Flood-Force Place Date? MLundy
rlcarey Online
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rlcarey
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Galveston, TX
FORCE PLACEMENT 5. When must the lender have flood insurance in place if the borrower has not obtained adequate insurance within 45 days after notification?

The Regulation provides that the lender or its servicer shall purchase insurance on the borrower’s behalf if the borrower fails to obtain flood insurance within 45 days after notification. If the borrower fails to obtain flood insurance and the lender does not force place flood insurance by the end of the force-placement notification period, the Agencies will expect the lender to provide a reasonable explanation for the brief delay, for example, that a lender uses batch processing to purchase force-placed flood insurance policies.

FORCE PLACEMENT 16. If a lender or its servicer receives a notice of remapping that states that a property will be remapped into an SFHA as a future effective date, what do the Act and Regulation require the lender or its servicer to do?

The Act and Regulation provide that if a lender, or its servicer, determines at any time during the term of a designated loan, that a building or mobile home and any personal property securing a loan is uninsured or underinsured, the lender or its servicer must begin the notice and force-placement process, as detailed in Q&A Force Placement 1.

That is from the proposed FAQs, but there has been no change in that requirement.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2253271 - 04/30/21 02:15 PM Re: Property Now in Flood-Force Place Date? MLundy
dutchbltz Offline
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Ok - I was looking at the new FAQ's too, and I guess what I'm held up on is why we wouldn't have to backdate it to the date of the new determination if we have to force place. Similarly, would the customer have to backdate their coverage (if they go ahead and buy it in the 45 days)?

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#2253272 - 04/30/21 02:21 PM Re: Property Now in Flood-Force Place Date? MLundy
rlcarey Online
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rlcarey
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Galveston, TX
Well, first I think it would be pretty unfair if they were not aware of the remapping and to not give them an opportunity to act. You send them the notice and they can buy a NFIP policy with a 1-day waiting period. If they do not provide you a policy, you do have the option to backdate the policy to the day of your notice.

NFIP Manual: The 1-day waiting period may only apply if the insurer receives the application and payment within 13 months from the effective date of the map revision.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2254180 - 05/20/21 06:43 PM Re: Property Now in Flood-Force Place Date? MLundy
dutchbltz Offline
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Joined: Oct 2015
Posts: 207
Agent is still fighting with us on this.... Any thoughts as to how the 'grandfather rule' factors in here? In our case, the client had X flood insurance in place, and is now in an AE zone due to remapping. Agent is absolutely sure that they can wait to do anything until the policy renews in August and says what we are requiring (changing zone to A) doesn't align with FEMA requirements.

A lender should first determine whether the difference
results from the application of the NFIP’s “Grandfather
Rule.” This rule provides for the continued use of a rating
on an insured property when the initial flood insurance
policy was issued prior to changes in the hazard rating for
the particular flood zone where the property is located.

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#2254201 - 05/21/21 01:40 PM Re: Property Now in Flood-Force Place Date? MLundy
rlcarey Online
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rlcarey
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Galveston, TX
The agent is correct and according to the new proposed FAQ matching zones is no longer a lender consideration - only that they have flood insurance.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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