Reply To: Mortgage Servicing

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After reading your question more carefully and looking at the rules, the force-placement provisions puts limits on charging the borrower for force-placed insurance rather than requiring you to purchase as the flood insurance rules do. When force-placing hazard insurance you need to follow the servicing rules force-placement provisions.

You can add this cost to the escrow balance or otherwise seek reimbursement from the borrower for the funds you advance, which may include adding it to the loan balance or as a payoff fee if your contract allows for that. I believe some of the regulators have informally said that adding premiums in, if the contract allows, would not be a MIRE event, but you may want to check with your specific examiners to get their take before you make a decision.