Posted By: Everest
Deficient flood coverage and force placement - 06/01/20 09:10 PM
We have a loan with flood insurance that was recently determined to be short on the flood insurance coverage. We are going through the process of initiated force placed insurance. However, do we force place for the entire amount needed or just the amount that makes up the shortage?
I had an understanding that there could not be more than one flood insurance policy in place at any one time but then I read the following: If a borrower fails to obtain the required amount of flood insurance coverage upon notification by an institution or its servicer, the amount that must be force placed is equal to the difference between the present amount of coverage, if any, and the lesser of the outstanding principal balance or the maximum coverage limit.
I had an understanding that there could not be more than one flood insurance policy in place at any one time but then I read the following: If a borrower fails to obtain the required amount of flood insurance coverage upon notification by an institution or its servicer, the amount that must be force placed is equal to the difference between the present amount of coverage, if any, and the lesser of the outstanding principal balance or the maximum coverage limit.