Reply To: Force-Place Question


Thanks rcooper. The following is an excerpt from FIL 14-2013. How does this change our process? We have been debating this and can’t seem to come to an agreement. The fact that the amdendment states that we can charge the borrower premiums and fees from the date of lapse, provided that they do not get their own coverage, is throwing us off.

Biggert-Waters Act Amendments
 Force Placement: The FDPA provides that a lender or its servicer must notify a
borrower if it determines that the flood insurance coverage on the improved real
estate or mobile home serving as collateral for the borrower’s loan has expired or is
less than the amount required for that particular property (42 USC 4012a(e)). The
notice must inform the borrower of the need to purchase flood insurance. If the
borrower fails to purchase flood insurance within 45 days after notification, the lender
or servicer must purchase flood insurance on behalf of the borrower and may charge
the borrower for the cost of premiums and fees incurred by the lender or servicer.
The Act amends the FDPA to:
o Provide that the premiums and fees that a lender or servicer may charge the
borrower include premiums or fees incurred for coverage beginning on the
date on which flood insurance coverage lapsed or did not provide sufficient
coverage amount;
o Require the lender or servicer, within 30 days of receiving a confirmation of a
borrower’s existing flood insurance coverage, to terminate any force-placed
insurance and refund to the borrower all force-placed insurance premiums and
any related fees paid for by the borrower during any period of overlap
between the borrower’s policy and the force-placed policy; and
o Require a lender or servicer to accept as confirmation of a borrower’s existing
flood insurance policy a declarations page that includes the existing flood
insurance policy number and the identity and contact information for the
insurance company or agent.