I believe the FEMA extension had no effect on force-placement requirements. It gave policyholders more time to renew the policy without it being cancelled, but that doesn't change the fact that the policy expired and your Bank didn't have flood insurance in place once it expired.
The FDIC stated in the following FAQ that lenders should factor the extended grace period when working with borrowers or with respect to force placement. However, IMO, this didn't specifically state that you must not force place once the policy expired.
Frequently Asked Questions for Financial Institutions Affected by the Coronavirus Disease 2019 (Referred to as COVID-19) â€“ As of May 27, 2020
27. [04/28/2020] Flood Insurance Coverage. Do flood insurance renewal premium payments still need to be received within 30 days of the policyâ€™s expiration date to avoid a lapse or reduction in coverage?
For certain flood insurance policyholders, the Federal Emergency Management Agency (FEMA) announced that the grace period for making premium payments has been extended during the COVID-19 emergency. Specifically, on March 29, 2020, FEMA indicated it was taking steps to ensure flood insurance policies are not canceled for nonpayment of premiums due to the COVID-19 emergency. FEMA acknowledged that National Flood Insurance Program (NFIP) policyholders may experience serious changes to their financial situations, including loss of income, along with disruptions of normal business services.
Due to a concern about possible lapses or reduction in coverage and the subsequent denial of claims occurring during the gap in coverage, FEMA extended the grace period for receipt by the NFIP of flood insurance renewal premiums and of any additional premiums due as required by an underpayment notice from 30 days to 120 days. The announcement applies to flood insurance policies with an expiration date between February 13, 2020 and June 15, 2020. Accordingly, lenders should factor this extended grace period (or as further extended by FEMA) in working with borrowers or with respect to force placement of flood insurance.
For additional information about FEMAâ€™s extension of the grace period for flood insurance renewal premiums, please see: https://nfipservices.floodsmart.gov/sites/default/files/w-20002.pdf; and https://www.fema.gov/news-release/2...-period-flood-insurance-renewal-premiums