Answer:
You cannot force place flood insurance until 45-days after providing the notice to the borrowers. Below is the regulation for banks whose primary regulatory agency is the Federal Reserve, but all of the primary regulators have similar regulations.
12 CFR 208.25(g) Forced placement of flood insurance. If a member bank, or a servicer acting on behalf of the bank, determines at any time during the term of a designated loan that the building or mobile home and any personal property securing the designated loan is not covered by flood insurance or is covered by flood insurance in an amount less than the amount required under paragraph (c) of this section, then the bank or its servicer shall notify the borrower that the borrower should obtain flood insurance, at the borrower’s expense, in an amount at least equal to the amount required under paragraph (c) of this section, for the remaining term of the loan. If the borrower fails to obtain flood insurance within 45 days after notification, then the member bank or its servicer shall purchase insurance on the borrower’s behalf. The member bank or its servicer may charge the borrower for the cost of premiums and fees incurred in purchasing the insurance.
First published on BankersOnline.com 3/16/09
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