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#1492269 - 01/10/11 02:39 PM New flood req'd on an assumption of mortgage
Many Hats Offline
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Joined: May 2008
Posts: 915
Orlando, FL
We have an existing loan that is being assumed by a new borrower. It is a commercial property. The loan number is staying the same.

Do we have to pull a new flood?

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Flood Compliance
#1492842 - 01/11/11 01:26 AM Re: New flood req'd on an assumption of mortgage Many Hats
jlroberts Offline
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jlroberts
Joined: Sep 2009
Posts: 1,601
Ohio
A previous determination may not be reused when making a new loan. An Assumption is defined as a new transaction for disclosure and HMDA purposes, therefore we understand that to mean it requires a new flood cert as well.

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#1493022 - 01/11/11 03:43 PM Re: New flood req'd on an assumption of mortgage jlroberts
newyork Offline
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Joined: Aug 2008
Posts: 447
Originally Posted By: jlroberts
A previous determination may not be reused when making a new loan. An Assumption is defined as a new transaction for disclosure and HMDA purposes, therefore we understand that to mean it requires a new flood cert as well.


question? for HMDA purposes, does the assumed loan get reported again to HMDA even though it was reported when the loan originated with the original borrower?

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#1493624 - 01/12/11 01:57 AM Re: New flood req'd on an assumption of mortgage newyork
jlroberts Offline
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jlroberts
Joined: Sep 2009
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Ohio
Yes. The HMDA Guide to Getting it Right should help you. http://www.ffiec.gov/hmda/guide.htm

Assumptions. An assumption occurs when an institution enters into a written agreement accepting a new borrower as the obligor on an existing obligation. An institution reports as a home purchase loan an assumption (or an application for an assumption) in the amount of the outstanding principal. If a transaction does not involve a written agreement between a new borrower and the institution, it is not an assumption for HMDA purposes and is not reported.

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#1493677 - 01/12/11 02:08 PM Re: New flood req'd on an assumption of mortgage jlroberts
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
When someone assumes a debt it would be my opinion the lender is making/extending credit to the person assuming the debt therefore it would be a designated loan subject to the flood rules.

However, remember the recent conversation in the threads about re-using determinations.

As long as the the determination is for the same lender, on the SFHDF, is less than 7 years old and there have been no map changes then you can follow the following formula:

Same property + same lender = same determination
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1510144 - 02/15/11 01:46 PM Re: New flood req'd on an assumption of mortgage Dan Persfull
Weezer Offline
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Joined: Mar 2009
Posts: 38
Given that the statement "Same property + same lender = same determination" is true, why would the Fed Consumer Compliance Handbook have the following statement (page 5, first column, 2nd paragraph): An institution may not rely on a previous determination set forth on an SFHDF when it makes a loan-only when it increases, extends, renews or purchases a loan.

That statement appears contradictory to me. I am attempting to remove the contradiction so I can move forward with confidence.

Thanks for any insight anyone can provide.

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#1510157 - 02/15/11 02:11 PM Re: New flood req'd on an assumption of mortgage Weezer
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Search the threads using the term Same property + same lender = same determination and my username or David Dickinson's username and you will find numerous discussions and regulatory cites. Or see Q&A #68 in the Flood FAQs.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1510160 - 02/15/11 02:22 PM Re: New flood req'd on an assumption of mortgage Dan Persfull
Weezer Offline
Junior Member
Joined: Mar 2009
Posts: 38
Thanks Dan.

Before I sent my question, I didn't realize that old posts were in the Lending Compliance forum and that the Flood forum was ne. I have since located all past comments.

Thanks again.

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#1510679 - 02/16/11 03:17 PM Re: New flood req'd on an assumption of mortgage Weezer
complylady Offline
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complylady
Joined: Jul 2002
Posts: 614
Michigan
If you use a flood determination company for LOL, they can reverify the determination for you with no additional charge. Then you can print the form and it will have a new date so you can evidence compliance. We request this from our vendor whenever we renew or extend loans.

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#1510694 - 02/16/11 03:29 PM Re: New flood req'd on an assumption of mortgage complylady
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Quote:
they can reverify the determination for you with no additional charge.


That depends on your contract. Several vendors charge for re-certifications.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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