Expiration of Flood Premiums

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Question:

We are on a loan audit at a client's bank. Loans with collateral located in a flood zone are escrowed to pay the premiums. This bank allowed a policy to expire and didn't pay the premium until 3 days after the expiration of the policy. I know I read somewhere in the new rules within the last 2 years that bank's have the responsibility of paying flood premiums timely, before the expiration of the policy. Did I dream this or is it part of the new rules? If so, where can I find it.

Answer:

The servicer must make payments from the escrow account in a timely manner. “Timely” is defined as on or before the deadline to avoid a penalty, see §1024.17(k) for further details.