Legal Question in Banking Law in California

There is no regulation I know of that requires a lender to escrow homeowners' insurance. There are regulations that require them to place it and bill you for it if you fail to provide proof of insurance, but that is a banking regulation to protect their security interest. You are not a beneficiary of that regulation, the depositors and shareholders of the lender are the beneficiaries of that regulation. Therefore you have not standing to complain about failure to comply with it. You also almost certainly were in violation of your loan agreement by YOUR failure to take out condo homeowners insurance. All you can really do is count yourself lucky you found all this out via a burst pipe rather than the entire building burning down or something.