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#2288195 - 08/30/23 06:26 PM Inadequate Flood Insurance Coverage
BA13 Offline
100 Club
Joined: Jul 2016
Posts: 198
We sent the borrower the required 45-day letter then 4 days later we received his policy however the required coverage was short by $9,000. Looking at Force Placement Q&A #2, it states the required notice must be provided 'at the time of the determination of no or insufficient coverage' so that makes me think we start the process over effective with the date we knew it was short. New letter, new 45 day wait., would you agree?

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Flood Compliance
#2288273 - 09/01/23 01:48 PM Re: Inadequate Flood Insurance Coverage BA13
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,396
Galveston, TX
You sent the 45 letter and within that letter I would hope you told them the minimum coverage that you required them to obtain. They provided you a policy with an adequate amount. I see no reason why you would have to start the 45-day process over. They did not meet the requirements from the first letter.
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#2288491 - 09/07/23 05:46 PM Re: Inadequate Flood Insurance Coverage BA13
Compliance NABW Offline
Diamond Poster
Joined: Oct 2015
Posts: 1,669
You no longer have to "wait" though, regardless. If you want to force place the additional coverage, you can do so immediately. In fact, my understanding is you actually need to do that, while also sending notice to the borrower that additional coverage is needed.

[If the borrower fails to obtain flood insurance within 45 days of the lender's notification to the borrower, the lender must purchase flood insurance on the borrower's behalf at that time. The lender must force place flood insurance for the full amount required under the Regulation, or if the borrower has purchased flood insurance that otherwise satisfies the flood insurance requirements but in an insufficient amount, the lender would be required to force place only for the “insufficient amount,” that is, the difference between the amount the borrower insured and the required amount of flood insurance.]

[In addition, before the lender or servicer must force place flood insurance, if the lender or servicer is aware that a borrower has obtained insurance that otherwise satisfies the flood insurance requirements but in an insufficient amount, the lender or servicer should inform the borrower an additional amount of insurance is needed in order to comply with the Regulation.]

Either way, I agree with RL that the 45-day process does not start again. It seems that at this point, you basically send a notice that additional insurance is needed and then you force place the gap amount right away.

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#2288492 - 09/07/23 05:46 PM Re: Inadequate Flood Insurance Coverage BA13
Compliance NABW Offline
Diamond Poster
Joined: Oct 2015
Posts: 1,669

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