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#16225 - 04/25/02 04:12 PM Flood and participation loan
Rick Tryon Offline
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Rick Tryon
Joined: Mar 2002
Posts: 169
Clinton IN, USA
We are doing a USDA participation loan. Since all underwriting done by USDA was acceptable to us and we are getting a first lien at 36% LTV, we took application and closed the loan in the same day. The LO accepted the flood determination that was done by the USDA 23 days prior to closing. If I am correct we should have a determination done in our name, for our loan on the property. This is easily corrected, but are we in violation because we did not receive this within a reasonable time prior to closing?
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General Discussion
#16226 - 04/26/02 04:06 AM Re: Flood and participation loan
cbinder63 Offline

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cbinder63
Joined: Dec 2001
Posts: 674
Colorado
My understanding is that a determination completed within the last 7 years (assuming that FEMA has not made changes to the flood maps) and on the Special Hazard Determination Form are valid. However, many lenders want a new one anyway.

Last edited by cbinder63; 04/26/02 04:07 AM.
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#16227 - 04/26/02 04:19 PM Re: Flood and participation loan
Rick Tryon Offline
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Rick Tryon
Joined: Mar 2002
Posts: 169
Clinton IN, USA
The problem that I am having with this (real or imagined) is that this determination was not done for our loan, but for the USDA's. If effect, we never did a determination for this loan. Also this particular determination has life of loan monitoring, of which we would not be a party to updates. Where can I find a reference about the seven year rule? It's stuck in my head that, even if the determination is less than seven years old, it still has to be in the name of the originating lender. Does anyone know of an exception for participation loans?
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#16228 - 04/26/02 06:02 PM Re: Flood and participation loan
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
The determination must in the bank's name.
A lender may rely on a previous flood hazard determination concerning subsequent loans by the same lender with respect to the same property if three conditions are met:
1. The previous determination was documented on a SFHDF;
2. The determination is £ 7 years old; and
3. No map revisions or updates affecting the secured property have been made.
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#16229 - 04/26/02 08:20 PM Re: Flood and participation loan
cbinder63 Offline

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cbinder63
Joined: Dec 2001
Posts: 674
Colorado
Thanks, David
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#16230 - 04/26/02 09:18 PM Re: Flood and participation loan
redsfan Offline
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redsfan
Joined: Dec 2000
Posts: 3,455
The Pennant Race
If you are purchasing the participation loan from USDA, then you are not required to obtain a new determination. See the Flood Q&A, part II, Question 2.

The original lender should have (and did, apparently) obtain a determination.
Last edited by pbrinker; 04/26/02 09:20 PM.
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#16231 - 04/26/02 09:22 PM Re: Flood and participation loan
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Good catch Paul. Thanks for your input.
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