Making the bank handle your flood insurance?

[Grant Doyle]

In last weeks podcast @Brandon Turner mentioned he had a friend that would purchase flood insurance before closing, then once the deal closed he would cancel the flood insurance. This would force the bank to find an insurer for the flood, and apparently banks can get a much better deal on flood insurance. 

Has anyone heard of this strategy that can elaborate on it more? I am using an FHA loan on a four-plex which requires FEMA flood and will not allow for a third party insurer. I am already cash flowing but being able to reduce that expense would be great. I plan to get an elevation certificate within the year to try to prove that my property, although in a flood plane, is not in a flood zone. Any advice is greatly appreciated, thanks!

[Tom S.]

@Grant Doyle  Interesting strategy.  Although the bank would get flood insurance (force place), it's technically violating the terms of the loan.  Not sure if they would try to call the loan in, but definitely would ruin the relationship.  For me, I strive to have a great relationship with my local banks, so getting more loans is relatively easy.