FEMA's Guidelines state that flood insurance shall be effective at the time of "loan closing." What is considered to be "loan closing"? Is it the date the borrower signs the note or can it be the date the loan is funded (usually a few days later)?

The date the borrower signs the note.

Agreed.

Why would you 'usually' be funding several days after the note is signed?!? (with the exception of ROR, of course)

A review of one bank's processes showed funding usually occured a few days after the note was signed and this is the date they are requiring flood insurance to be effective.

Are there any references to support the opinion that loan closing occurs the date the borrower signs the note?

As long as you have proof of insurance prior to the signing of the note, they can make the effective date prior to or the date of funding, even if it is a few days later. You can't close the loan (signing of the note) without proof of insurance.

what if you are doing a new loan with an existing customer that paid off his loan last year and property is in a flood zone and we had flood insurance, we of coursed pulled a new flood and will have customer sign notice, but since he already has flood insurance in place do we have to give at least 10 days before closing? we pulled new flood today and customer is coming in to sign Flood Notice, Flood Insurance in force already, can we close loan tomorrow?

Yes.

thank you.