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#1611377 - 09/30/11 07:33 PM Acquired loans review - identified uninsured loans
AuditorK Offline
Platinum Poster
Joined: Feb 2003
Posts: 961
PA
We recently completed an acquisition of another bank. As part of our due dilligence, we reviewed their real estate secured loans for flood compliance. This bank's market area included quite a few SFHAs and we wanted to get a comfort level with the security of our collateral. We have identified a number of loans for which the properties are located in SFHAs, however the original determinations showed they were not. These were self-completed determinations and there were either errors made or map changes since.

Even though we haven't triggered a trip wire (made, increased, renewed, or extended) any loans, I believe since we now are aware of uninsured loans, we must notify and send the 45 day letters. Am I correct?

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Flood Compliance
#1611413 - 09/30/11 08:10 PM Re: Acquired loans review - identified uninsured loans AuditorK
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,460
Bloomington, IN
339.7 Forced placement of flood insurance.

If a bank, or a servicer acting on behalf of the bank, determines, at any time during the term of a designated loan, that the building or mobile home and any personal property securing the designated loan is not covered by flood insurance or is covered by flood insurance in an amount less than the amount required under 339.3, then the bank or its servicer shall notify the borrower that the borrower should obtain flood insurance, at the borrower's expense, in an amount at least equal to the amount required under 339.3, for the remaining term of the loan. If the borrower fails to obtain flood insurance within 45 days after notification, then the bank or its servicer shall purchase insurance on the borrower's behalf. The bank or its servicer may charge the borrower for the cost of premiums and fees incurred in purchasing the insurance.
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The opinions expressed are mine and they are not to be taken as legal advice.

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