Q: Can you please provide some guidance on the situation where a notice has been sent to a borrower notifying them that contents coverage is a requirement? The amount was $500,000. If the borrower provides $250,000 does the policy still get force placed on day 45 or do they need to send a new notice stating that the coverage is now insufficient?
A: The initial notice should require the borrower to obtain a sufficient amount of coverage within 45 days. If the borrower obtains coverage for an insufficient amount, the lender should force place coverage for the deficient amount after 45 days have passed from the initial notice. The 45-day notification period does not reset in this scenario.
– This Q&A was included in the materials from the FDIC New York Region Regulatory Teleconference: “Flood Insurance – Flood Insurance Compliance and an Examiner’s Perspective” which took place on December 3, 2012. These materials may be found here: https://www.fdic.gov/news/conferences/NY/2012-12-03.html