I recently attended the 2007 Lending Compliance Recap webinar and I had a question regarding the Common Flood Violations. It states that a master or blanket insurance policy on force placed flood insurance is NOT in compliance with rules. We have a customer that we force placed on and I am wondering if this is not in compliance. In the webinar it states that the use of master or blanket lender paid insurance policies as a substitute for borrower paid flood insurance is NOT acceptable. Does this apply to force placed policies as well or not since they are not lender paid.

When you force place flood insurance you must do so on behalf of the borrower, not on behalf of the bank. Your master/blanket policy protects the bank as the insured, not the borrower.