We have an acquired loan with a flood insurance shortfall in coverage (happened before my watch). The customer is in the process of requesting a LOMA, but the forceplace clock is ticking and will likely expire before FEMA responds. I am suggesting that we go ahead and forceplace at the required point in time and that the bank offer to pick up the tab until the LOMA comes back (if it is not favorable to the borrower, they would have to pick up the tab going forward). Am I being too strict? Should I allow the lapse to remain while the LOMA is being determined (FEMA has up to 90 days to respond).

Thoughts?

I don't remember reading in the flood guidelines that you can ignore the force placement requirements if the customer is actively requsting a LOMA. I do think you're being very generous to the customer in your offer to pick up the tab pending the LOMA.

I agree with Tom. I think you're being very "un-strict". The LAW requires flood insurance on this loan. It's not the bank's job to get a LOMA or to cover the loan during the LOMA process. It's the borrower's responsibility.

It sounds like this loan is already out of compliance (with the shortfall in coverage). DO NOT allow the lapse to occur.