When Should You Force Place Flood Insurance?

Financial Institutions

May 01, 2014

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On October 30, 2013, proposed rules implementing the provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 were issued. One of the provisions included in Biggert-Waters allows, but does not require, servicers to charge borrowers for force-placed flood insurance beginning on the day the flood policy lapses or coverage is insufficient. The servicer will, however, be required to reimburse the borrower for any time period for which a force-placed flood insurance policy and a borrower-paid policy overlap. This was a change from the previous requirement that prevented servicers from charging borrowers until 45 days after a notice was sent to the borrowers informing them that their flood policy had lapsed or was insufficient.

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