How do you all handle expiring force placed flood insurance? Do you let it expire and then send out the 45 day letter? Do you send out a letter 45 days from expiration telling them it is about to expire and they can get cheaper insurance if they get it within 45 days? Or do you go ahead and force place it again?

You handle it the same way as you would borrower placed flood insurance that is expiring. You are required, whether you placed the insurance or the borrow placed it, to give the borrower 45 days to obtain insurance.

You start the process all over again when the policy actually expires. From the Flood Insurance Manual:

Renewability

The MPPP policy is a 1-year policy. Any renewal of that policy can occur only following the full notification process that must take place between the lender (or its authorized representative) and the insured/ mortgagor, when the insured/ mortgagor has failed to provide evidence of obtaining a substitute flood insurance policy.

If you force place through a private insurer, don't you have the option to renew the force placed policy right away or begin the 45 day notice process over again?

No you do not have that option. You must notify the borrower that flood insurance has expired and is required for the duration of the loan and allow them 45 days from that notice to purchase the flood insurance.

If that's correct, Dan, then what is the verbiage "This method of insuring the risk does not entail the use of any specific notice to the borrower" referring to? (under Standard NFIP policy forceplacement)

You need to read the sentence just before that one:

After the expiration of the 45-day waiting period, if the lender has sufficient information to produce a policy, it may place a policy with an insurer through an agent of its choice.

If after the 45 days expires and the lender chooses to force place through a private vendor no notice to the borrower is required to notify them the insurance is being placed through a private vendor vs the NFIP.

I meant for renewal purposes, not for the original force-placement. With MPPP being a one-year-only policy...you start the process all over again each year. It reads to me that if you are utilizing a standard NFIP policy, future notifications would not be required, since those would be "auto-renewed" upon payment by the lender (or borrower).

That section starting on page 39 of the Sept 1999 Purchase guidelines is addressing force placing a policy through a Standard NFIP Policy, not the MPPP. BTW all flood policies are (or should be) only written for one year. I have never seen one written for a longer period.


From the Sept 2007 Mandatory Guidelines;

Pages 41 and 42:

Force placement of flood insurance is intended only as a last resort, and on mortgages whose mortgagors have failed to respond to the notifications required by law.

The 1994 Reform Act provides that a lender must inform its borrowers that they have a free choice of an insurer from whom to purchase coverage. That free-choice purchase option also applies to a lender when dealing with force-placed coverage. If, within 45 days from the initial notice, a borrower fails to comply by voluntarily obtaining coverage, a lender or servicer must obtain either:

• A Mortgage Portfolio Protection Program (MPPP) policy through a WYO insurer; or

• An SFIP through either a WYO insurer or the NFIP Servicing Agent; or

• Non-NFIP flood coverage from a private industry insurer if such coverage is available.



So, when your force placed policy expires are you going to re-force place it without the proper notice to the borrower?

I'm just attempting to get it crystal clear since the section on MPPP and the section on standard policy requirements differ. I totally understand the requirements on MPPP coverage as the premiums are much higher...but for a regular policy, the premium is the same whether the borrower gets it or the lender gets it so it made sense that if the borrower defaulted one time after given notice, that it could conceivably be renewed with out notice as well...since the guidelines are very different for each type...it just isn't clear to me!

An MPPP is specifically for one year and is not renewable. Although other types are "written" for one-year, they are renewable (at least to my knowledge) without being rewritten.

You are talking about flood insurance aren't you??? And here I thought you were a realist and not a dreamer...

We do notify the customer when a force placed policy is expiring and let them know it will be renewed. Our private insurer that force places our policies then renews the policy right at expiration. According to RR Joker, it sounds like this may be allowable on a force placed policy with a private insurer? I guess I'm not crystal clear yet myself on this topic.

Thanks for the smile that gave me, Dan! It must have been one of those "wishful thinking" kinda Fridays!