With respect to force-placed hazard insurance governed by the RESPA servicing rules, the requirement to notify borrowers before charging for force-placed insurance applies only to closed-end consumer mortgage loans. Loans made for a business purpose are exempt.

However, with respect to force-placed flood insurance, the requirement to wait 45 days before charging a borrower for a force-placed flood insurance policy applies to all loans, whether consumer or commercial.

For resources related to our guidance, please see:

• Regulation X, 12 CFR 1024.37(c)(1) (“Before a servicer assesses on a borrower any premium charge or fee related to force-placed insurance, the servicer must: (i) Deliver to a borrower or place in the mail a written notice containing the information required by paragraph (c)(2) of this section at least 45 days before a servicer assesses on a borrower such charge or fee . . . .”)

• Regulation X, 12 CFR 1024.30(a) (“Except as provided in paragraphs (b) and (c) of this section, this subpart applies to any mortgage loan, as that term is defined in § 1024.31.”)

• Regulation X, 12 CFR 1024.31 (“Mortgage loan means any federally related mortgage loan, as that term is defined in § 1024.2 subject to the exemptions in § 1024.5(b), but does not include open-end lines of credit (home equity plans).”)

• Regulation X, 12 CFR 1024.5(b) (“Exemptions. . . (2) Business purpose loans. An extension of credit primarily for a business, commercial, or agricultural purpose, as defined by 12 CFR 1026.3(a)(1) of Regulation Z. Persons may rely on Regulation Z in determining whether the exemption applies.”)

• National Flood Insurance Act, 42 USC 4012a(e) (“Purchase of coverage on behalf of borrower If the borrower fails to purchase such flood insurance within 45 days after notification under paragraph (1), the lender or servicer for the loan shall purchase the insurance on behalf of the borrower and may charge the borrower for the cost of premiums and fees incurred by the lender or servicer for the loan 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.”)

• OCC Flood Insurance Rules, 12 CFR 22.7(a) (“If a national bank or Federal savings association, or a servicer acting on behalf of the bank or savings association, 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 § 22.3, then the national bank or Federal savings association, or a servicer acting on its behalf, 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 § 22.3, for the remaining term of the loan. If the borrower fails to obtain flood insurance within 45 days after notification, then the national bank or Federal savings association, or its servicer, shall purchase insurance on the borrower’s behalf. The national bank or Federal savings association, 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.”)