Federal Mortgage LawsQuestion 70 of 400
A borrower lets required flood insurance lapse. After proper notice, the servicer purchases coverage and charges the borrower. This is known as:
a.Force-placed (lender-placed) flood insurance
b.A qualified mortgage
c.An affiliated business arrangement
d.A right of rescission
Explanation
When a borrower fails to maintain required flood insurance, the servicer may obtain force-placed (lender-placed) coverage and charge the cost to the borrower, but only after sending the borrower notice and allowing at least 45 days to obtain coverage. If the borrower later provides proof of their own coverage, the servicer must terminate the force-placed policy and refund overlapping premiums.
Law Reference: Flood Disaster Protection Act / National Flood Insurance ProgramPractice all 400 questions free — no signup required.
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