We have a loan (not a new loan) where the borrower provided us with a flood policy in the amount of $12,000 when we needed coverage in the amount of $140,000. A letter was sent to the borrower giving them 45 days notice to provide us with adequate coverage or we would force place for the difference. The 46th day was 2/11/13. On 1/23/13 the flood policy was increased from $12,000 to $130,000 effective 2/17/13. Can we force place $10,000 since we informed the borrower in the letter that we needed $140,000 (but received $130,000) or do we need to send another letter to the borrower giving them another 45 days notice?

You don't have to give them another 45 day letter, but force placing a policy for $10,000 might not be the solution, unless it will insure amounts over and above any other policies in place.

Thanks for the advice.

I found in the Finalized Flood 2011 Q&A that it states, "given that the lender is already aware during the 45-day notice period that it may be required to force place insurance if there is no response from the borrower, any delay in force placing flood insurance should be brief. Where there is a brief delay in force placing required insurance, the proposed question and answer stated that the Agencies will expect the lender to provide a reasonable explanation for the delay."

With that, it would allow some time to contact the borrower and explain the need for additional insurance and request that the policy be increased.

Thanks again for your help.