Flood Map Revision
Answer by Randy Carey, BOL Guru Guru Bio
Question: We closed a 5-year term loan using a life-of-loan flood determination. No extensions or renewals have taken place or are anticipated until maturity in 2013. However, we recently received notification that the property is now in a flood zone due to map revisions. Do we need to obtain flood insurance at this point even if nothing has been renewed, extended, or increased? Do we need to notify the customer of the map change?
Answer: Yes, you have become aware that the property is now in a flood zone and you should begin the 45-day force placement process. See page 41 of the Mandatory Purchase of Flood Insurance Guidelines.
"If at any time during the term of a covered loan, the lender or servicer determines that the building securing the loan is not covered by flood insurance, or is covered by such insurance in an amount less than that required by law, the lender or servicer must first notify the borrower of the need to carry adequate flood insurance coverage."
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