12 C.F.R. § 339.7

Force placement of flood insurance

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(a) Notice and purchase of coverage. If an FDIC-supervised institution, or a servicer acting on its behalf, determines at any time during the term of a designated loan, that the building or mobile home and any personal property securing the designated loan is not covered by flood insurance or is covered by flood insurance in an amount less than the amount required under § 339.3, then the FDIC-supervised institution or its servicer shall notify the borrower that the borrower should obtain flood insurance, at the borrower's expense, in an amount at least equal to the amount required under § 339.3, for the remaining term of the loan. If the borrower fails to obtain flood insurance within 45 days after notification, then the FDIC-supervised institution or its servicer shall purchase insurance on the borrower's behalf. The FDIC-supervised institution or its servicer may charge the borrower for the cost of premiums and fees incurred in purchasing the insurance, including premiums or fees incurred for coverage beginning on the date on which flood insurance coverage lapsed or did not provide a sufficient coverage amount.

(b) Termination of force-placed insurance—(1) Termination and refund. Within 30 days of receipt by an FDIC-supervised institution, or a servicer acting on its behalf, of a confirmation of a borrower's existing flood insurance coverage, the FDIC-supervised institution or its servicer shall:

(i) Notify the insurance provider to terminate any insurance purchased by the FDIC-supervised institution or its servicer under paragraph (a) of this section; and

(ii) Refund to the borrower all premiums paid by the borrower for any insurance purchased by the FDIC-supervised institution or its servicer under paragraph (a) of this section during any period during which the borrower's flood insurance coverage and the insurance coverage purchased by the FDIC-supervised institution or its servicer were each in effect, and any related fees charged to the borrower with respect to the insurance purchased by the FDIC-supervised institution or its servicer during such period.

(2) Sufficiency of demonstration. For purposes of confirming a borrower's existing flood insurance coverage under paragraph (b) of this section, an FDIC-supervised institution or its servicer shall accept from the borrower an insurance policy declarations page that includes the existing flood insurance policy number and the identity of, and contact information for, the insurance company or agent.

Notes of Decisions

Cited in 3 cases (1 in the last 5 years), 2008–2022 · leading case: Audler v. CBC Innovis Inc., 519 F.3d 239 (5th Cir. 2008).

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Audler v. CBC Innovis Inc., 519 F.3d 239 (5th Cir. 2008). “§ 4102a(b); 12 C.F.R. 339.7. The Reform Act also amended the NFIA to permit lenders to delegate to third parties the task of determining whether a particular piece of property falls within a SFHA, but “only to the extent that such person guarantees the accuracy of the…”

Oates v. Wells Fargo Bank, N.A., 880 F. Supp. 2d 620 (E.D. Pa. 2012). · cites it 2× “§ 4012a(e)(l); 12 C.F.R. § 339.7 . If the borrower fails to purchase flood insurance coverage within forty-five days after the lender provides notice, the lender must purchase flood insurance on behalf of the borrower and may charge the borrower any associated costs of premiums…”

Hill v. Nationstar Mortg. LLC d/b/a Champion Mortg., LLC (E.D. Va. 2022). “12 C.F.R. § 339.7 ; (Am. Compl. { 24.) Pursuant to the Mortgage’s terms, Champion assessed the insurance premium — a sum in excess of $1,000 — on Plaintiff.”

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