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#2270681 - 05/19/22 09:44 PM Force-Placed Insurance
banker-12 Offline
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Joined: May 2007
Posts: 1,240
I have a couple of questions on flood:

(1) The Q & A's Force-Placement 2 states that "notice will be provided to the borrower at the time of determination of no or insufficient coverage. if there is a brief delay in providing the notice, the Agencies will expect the lender or servicer to provide a reasonable explanation for the delay."

It's stated that the use of "brief delay" is to emphasize to lenders that the delay should not be long.
What would be considered a "brief delay"? Is 7 days considered too long?

We determined that coverage was insufficient but did not start the force-placed procedures until 7 days later. Would this be considered a violation?

(2) Q & A Force Placement 13 - It states that we can rely on existing force-placed insurance for a refinance (replacing the existing note with a new one) and a loan modification, is this correct?

Thank you

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Flood Compliance
#2270686 - 05/20/22 12:08 PM Re: Force-Placed Insurance banker-12
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
1) If you review for expired flood policies weekly and you have one that expired 6 days ago and you force place today, I think you would be fine. Knowing that you have a loan with an expired policy for 7 days and not doing anything - it does not meet the smell test.

2) I do not understand. It means what it says. How can that not be correct? What is your actual question?
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#2270690 - 05/20/22 01:39 PM Re: Force-Placed Insurance banker-12
banker-12 Offline
Diamond Poster
Joined: May 2007
Posts: 1,240
Thank you.

Just wanted to make sure on a refinance because we thought it was considered a new loan and couldn't rely on a force-placed policy. We have never used a force-placed policy on a MIRE event.

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#2270693 - 05/20/22 01:52 PM Re: Force-Placed Insurance banker-12
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
You can and that was the unofficial position expressed by some of the regulators for a number of years. Whether you want to or not is another question. When I was on the line, I would not. Lending was always a two-way street in my mind. I give you our depositor's money - you agree to pay me back and abide by the rules of our loan agreement. You want me to increase, renewal or extend your loan when you are in default of your loan agreement with me (if this is not some sort of a bona-fide workout situation)? Go talk to someone else.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2270695 - 05/20/22 02:14 PM Re: Force-Placed Insurance banker-12
banker-12 Offline
Diamond Poster
Joined: May 2007
Posts: 1,240
Thank you

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