“Can we renew a loan which is covered by force placed insurance?” Variations on this question have come up several times in recent seminars I have conducted. The answer to the question is no. If a borrower refuses to obtain flood insurance coverage as a condition of obtaining a loan, the loan is deficient and may not be made. Force placement of coverage is designed for use at any time during the loan in uninsured and underinsured situations; it is not intended for use at loan origination. For more information on this matter refer to FEMA Mandatory Purchase of Flood Insurance Guidelines.
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