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#317526 - 02/16/05 02:00 PM Is Life-of-Loan flood certification mandatory??
someone else Offline
Power Poster

Registered: 08/10/04
Posts: 3300
Loc: back to my roots
My goodness...the ridiculous questions keep coming, I am so sorry!!

None of the loans that we are purchasing has a life-of-loan flood certification. Now I understand that if we do not have something like that we will not be notified if the borrower moves in or out of a flood zone. Other than being a good business practice, is a LOL cert mandatory by the Mandatory Flood Purchase Guidelines? I cannot find anything in there saying one way or the other...
_________________________
Somewhere, something incredible is waiting to be known. - Carl Sagan

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Lending Compliance
#317527 - 02/16/05 02:07 PM Re: Is Life-of-Loan flood certification mandatory??
Dan Persfull Offline
10K Club

Registered: 08/28/02
Posts: 40929
Loc: Bloomington, IN
No. However, Freddie and Fannie requires monitoring. You may want to review their Servicer Guides.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#317528 - 02/16/05 02:12 PM Re: Is Life-of-Loan flood certification mandatory??
someone else Offline
Power Poster

Registered: 08/10/04
Posts: 3300
Loc: back to my roots
These loans will not be sold to FNMA, we will keep them in our portfolio and the originating lender will retain servicing. In your opinion, do you think that keeps us in the clear?
_________________________
Somewhere, something incredible is waiting to be known. - Carl Sagan

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#317529 - 02/16/05 02:41 PM Re: Is Life-of-Loan flood certification mandatory??
Dan Persfull Offline
10K Club

Registered: 08/28/02
Posts: 40929
Loc: Bloomington, IN
Yes. The NFIP encourages but does not require monitoring. However, if you refinance, renew, extend, modify etc. these loans you will have to either do a new determination or be sure someone checks the appropriate map(s) for changes.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#317530 - 02/16/05 02:58 PM Re: Is Life-of-Loan flood certification mandatory??
someone else Offline
Power Poster

Registered: 08/10/04
Posts: 3300
Loc: back to my roots
OK - good to know. Thanks so much, as always, for your help. You are an invaluable resource!
_________________________
Somewhere, something incredible is waiting to be known. - Carl Sagan

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#317531 - 02/16/05 04:09 PM Re: Is Life-of-Loan flood certification mandatory??
Anonymous
Unregistered


We had some loans like that and it drove the FRB examiners crazy because they wanted proof the properties had not moved into a flood plain when they were in for our exam. What I did was check annually and right before the examiners came to verify the flood map had not changed. They do not change often and than I did a file memo. We only had several hundred of these loans so the number of flood maps to check was only a few and it was fairly easy. Even so it was a burden and I eventually convinced senior management to pay for a life of loan cert on all the ones we had not refi'd.

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#317532 - 02/16/05 04:13 PM Re: Is Life-of-Loan flood certification mandatory??
Anonymous
Unregistered


Flood is a real hot button these days and while it may not be mandatory to have life of loan, it would be prudent to have some type of review process in place,especially when your regulator drops by for a Flood exam and ask to see your procedure for reviewing loans that have improved dwellings securing the loan. Better have something in place that's been tested...

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#317533 - 02/16/05 09:44 PM Re: Is Life-of-Loan flood certification mandatory??
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 50412
Loc: Galveston, TX
There are no requirements to monitor purchased loans.
_________________________
The opinions expressed are my own, take them or leave them.

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#317534 - 02/16/05 10:12 PM Re: Is Life-of-Loan flood certification mandatory?
Kathleen B Online

10K Club

Registered: 12/27/00
Posts: 17573
I agree that there is no requirements for Life of Loan monitoring on any loan (it just makes life easier, as noted) and there technically is no requirement to monitor purchased loans.

However, on purchased loans it is important to pay attention to the Interagency Q&A:

2. Does the Regulation apply to loans purchased from others?
Answer: No. The Regulation lists certain events that trigger its
requirements: making, increasing, extending or renewing a designated
loan. The purchase of a loan is not an event that requires the
purchaser to make a new determination at the time of purchase. However,
if the lender becomes aware at some point during the life of the loan
that flood insurance is required, then the lender must comply with the
Regulation. Similarly, if the lender extends, increases or renews the
loan, the Regulation applies.
_________________________
Kathleen Blanchard CRCM "Kaybee"
Lending/CRA/HMDA/Mapping/Consulting
www.kaybeescomplianceinsights.com

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