If the Bank determines at any time during the term of the loan that the building, mobile home or contents is not covered by flood insurance or such coverage is inadequate, the Bank must require the borrower to obtain insurance. If the borrower fails to obtain coverage within 45 days of the notice the Bank must purchase flood insurance on behalf of the borrower and may charge the borrower for the costs incurred (i.e., premiums and fees). This is referred to as “forced placement” insurance.
If the borrower later provides confirmation of a borrower’s existing flood insurance coverage, the Bank must terminate the force-placed insurance and refund all premiums for insurance coverage in place while the borrower also had coverage in place.