Flood Determinations
What federal agency is responsible for creating and maintaining flood maps in the United States?
FEMA
DOUBLE JEOPARDY:
What is the maximum required flood insurance coverage for a residential building? What about a non-residential building?
$250,000- Non-residential
$500,000- Residential
Loan Administrators are responsible for obtaining flood determinations. How many days prior to closing must the determination be pulled?
10 days.
If a loan is secured by vacant land and IS in a flood zone, is flood insurance required?
No, insurance only applies to insurable buildings.
True or False: The amount of flood insurance must be at least equal to the loan amount.
False, it must be the lesser of the loan balance, insurable value of the building, or NFIP max coverage.
What is a property with a high likelihood of flooding classified as? Also known as SFHA.
Special Flood Hazard Area
Can we accept proof of flood insurance at the closing table?
No, proof of sufficient flood insurance coverage must be provided prior to closing.
DOUBLE JEOPARDY:
A prior flood determination may be used when renewing, increasing or extending a loan only if these 2 conditions are met.
The determination is less than 7 years old and there have been no new or revised FEMA flood maps issued since the original determination.
No, the entire building must be covered.
True or False: If the flood map changes during the loan term and the property is moved into an SFHA, the borrower must obtain coverage.
True, the borrower will have 45 days from notification of the map change to obtain coverage before the bank will force place coverage.
What letter most commonly represents moderate to low flood risk areas on FEMA flood maps?
Zone X
If there is a lapse in Flood insurance coverage how many days does the customer have before the bank is required to force place coverage?
45 days
How long must the bank retain a copy of the signed flood hazard determination form?
For the life of the loan.
What is the process for pulling flood zone determinations if the loan in question is cross collateralized.
Pulling determinations for properties listed on both loans utilizing both loan numbers. For example, if there are 2 loans and 4 properties total, there should be 8 determinations. 4 with one loan number listed and 4 with the other loan number listed.
True or False: If a property has multiple structures in different flood zones, only the largest building needs flood coverage.
False, each insurable structure in a flood zone must be covered.
DOUBLE JEOPARDY:
When must a bank re-check the flood zone status of collateral? (4 Answers)
MIRE:
Make Increase Renew or Extend
The customer can provide 2 types of flood insurance policies. What are the two types of policies called?
NFIP (National Flood Insurance Policy)
or
Private Policy
What is an example of a detached structure?
Shed- pool house- etc.
A parking lot on a commercial property is in an SFHA. Does it require flood insurance coverage?
No, only insurable structures require coverage.
True or False: If multiple buildings are held as collateral on a loan and they are all in a flood zone we may accept one NFIP policy to cover all buildings.
False, each building will require its own policy unless a private policy is provided.
How does FEMA define an insurable dwelling.
A dwelling with 2 walls and an attached roof.
Can a lender waive flood insurance for a commercial property if the borrower signs a waiver?
No, waivers are not allowed; coverage is mandatory.
If a property is determined to be in a flood zone and includes a qualifying detached structure, what will loan administration need to provide to the borrower and when?
Flood Acknowledgement for Additional Structures form, prior to closing.
In a construction loan should we require flood insurance prior to closing?
No, flood insurance will be required at 1st draw or slab/foundation. (This will be listed on the Construction Loan Requirement form to be signed by the customer)
True or False: A lender may force place coverage even if a private policy is provided but it does not meet NFIP requirements.
True