I'm doing a flood audit. I came across a development loan, (streets, gutters, etc.), for which a flood hazard determination was not needed. However, the officer pulled one, prior to closing, anyway. (In the future, we will fund construction on this land, but with a construction loan.) A couple of the 24 lots are located in a flood zone. Prior to closing this development loan, the officer told the borrowers about the lots in the flood zone, but did not have them sign a Notification form, thinking it was not necessary for this loan.

How should I proceed? The loan is not a covered loan, but it is right on the flood invoice and in plain sight for all auditors to see, that we pulled the determination, found out the prop is in a zone and did not officially notify the borrowers. Are we in violation? Should the officer have the borrowers sign the notification now?

Thanks for your help,

Deb

As you said the current loan is not a designated loan therefore you have no legal requirement to provide the notice.

Perfect. Thank you for your quick response Dan.