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We recently changed companies that we pull our flood determinations through, so we pulled new floods on the current loans that were in a flood zone. One determination came back that the home was not in a flood zone. The Flood Insurance was forced place from the beginning of the loan because the borrowers did not want to purchase their own flood insurance. What would be the process of cancelling the flood insurance and issuing a refund? Their flood insurance is being escrowed as well.
April,
I have some follow-up questions with this situation. Did the flood maps change where this house is located? Do you have “life of loan” coverage through the former company? If it were me in this situation, I would have the “new” determination company provide me with a map overlay, at a minimum, to show that the home is no longer in a flood zone. You need strong documentation as to why the coverage was dropped.
On another note, the loan shouldn’t have been made if the borrower wasn’t willing to purchase flood coverage. The flood insurance is supposed to be in place, initiated by the borrower, prior to the loan closing. Forced place insurance is reserved for those circumstances where a borrower has allowed the coverage to lapse and the 45-day notice requirements need to be met.
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