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#615258 - 09/19/06 07:10 PM flood fun
notuntermywatch Offline
Gold Star
Joined: Jun 2006
Posts: 392
MN
We have a customer who is having a heck of time getting their insurance company to underwrite a flood insurance policy because they don't have an elevation certificate for the property (the NDIP confirmed this could be an issue).

We checked on getting force placed insurance (we thought we might have the same issue) and we can get it and its actually much cheaper. The borrowers are going to pursue a LOMA/LOMR.

My question is, can we force place the insurance immediately and waive the 45 day waiting period if the customer signs off on it (since they can't get insurance from their company anytime soon. ) That way we can have insurance sooner than later on the property.

The customers want us to do this, but will this violate the forceplacement rules????

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Lending Compliance
#615259 - 09/19/06 07:44 PM Re: flood fun
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Are you trying to renew the flood insurance, or are you doing a new loan and need to obtain flood insurance to close?

If you are doing a new loan and need to obtain flood insurance, you can not use the force placement option. See page 37 of the Mandatory Purchase Guidelines.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#615260 - 09/19/06 09:04 PM Re: flood fun
notuntermywatch Offline
Gold Star
Joined: Jun 2006
Posts: 392
MN
Well, I would like to say that we closed it with insurance, but we misunderstood the documentation provided by the insurance agent at closing. We had an application that said all the right things, but when we called to get a copy of the binder after closing they were like, we can't issue a policy.

So now we have the situation at had....can we forceplace now (since the loan has closed). Neither the borrowers or the bank want to wait, the borrowers just can't get insurance right away so forceplacement is the better option right now.

Any thoughts with those facts in mind?

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#615261 - 09/19/06 10:20 PM Re: flood fun
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
Force place. The bank will be covered whether or not the customer pays the cost of the coverage during the 45 day period. Limit your risk, from a flood and from a violation.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#615262 - 09/20/06 12:44 PM Re: flood fun
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
I agree, if you have closed the loan then you must get flood insurance in place. However, force placing the flood insurance after the fact will not negate any possible CMP and/or violation citations for closing the loan without it in place.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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