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#1823249 - 06/13/13 03:33 PM Notice Provisions
ynot Offline
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Florida
I was at a seminar this week and the statement below is in the materials, not quite sure I understand it.

"When a bank makes, increases, extends, or renews a loan secured by a building or a mobile home and any personal property located or to be located in a special flood hazard area:
The bank shall mail or deliver a written notice to the borrower and to the servicer in all cases whether or not flood insurance is available under the Act for the collateral securing the loan."

Scenario #1: Property is partially in a SFHA, the structures on the property are not in the SFHA, is the notice required?

Scenario #2: Property is partially in a SFHA, there is a structure in the SFHA, however the structure is a pole barn which has a roof but no walls, it is not an eligible building. Is the notice required?

When I read the information from the seminar I take it as the notice will be sent regardless of whether the structure is required to have flood insurance or not.

Wouldn't this confuse the customer since the notice states: "We will not make you the loan that you have applied for if you do not purchase flood insurance. If you fail to renew flood insurance on the property, federal law authorizes and requires us to purchase the flood insurance for you at your expense. The flood insurance must be maintained for the life of your loan."

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Flood Compliance
#1823296 - 06/13/13 04:19 PM Re: Notice Provisions ynot
rlcarey Offline
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The seminar materials are correct and I think you may be misinterpreting them. It does not indicate that you need to send the notice in either scenario you presented.

#1 there is no 'loan secured by a building or a mobile home and any personal property located or to be located in a special flood hazard area'

#2 there is no "building".
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#1823306 - 06/13/13 04:32 PM Re: Notice Provisions ynot
ynot Offline
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Joined: Sep 2011
Posts: 81
Florida
Originally Posted By: ynot

The bank shall mail or deliver a written notice to the borrower and to the servicer in all cases whether or not flood insurance is available under the Act for the collateral securing the loan."



So then what scenario is this statement referring to?

Can you provide an example?

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#1823335 - 06/13/13 05:09 PM Re: Notice Provisions ynot
RR Joker Offline
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ynot...you have to adhere to that statement if the first statement is true.
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#1823386 - 06/13/13 06:17 PM Re: Notice Provisions ynot
complyorelse Offline
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U.S.
That's a great question, ynot. I can't think of a scenario when you wouldn't have already provided the notice with each MIRE.

Can anyone else?

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#1823419 - 06/13/13 06:59 PM Re: Notice Provisions ynot
RR Joker Offline
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The notice is not required for either situation listed. Again, the second section of that paragraph only applies if the first sentence is true.
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#1823494 - 06/13/13 09:15 PM Re: Notice Provisions ynot
Derwood Offline
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ynot - I think what the statement is reffering to is a scenario where the collateral is located in a SFHA in a non-participating community so federal flood insurance is not available under the act. In that case you give them a notice for Non-Participating community.

As others have pointed out the statement has no bearing on either of those two scenarios
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#1823513 - 06/13/13 09:43 PM Re: Notice Provisions ynot
rlcarey Offline
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Galveston, TX
Derwood is correct.
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#1823709 - 06/14/13 04:57 PM Re: Notice Provisions ynot
ynot Offline
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Joined: Sep 2011
Posts: 81
Florida
Thank you Derwood, you have clarified it for me. This is what I was thinking, but wasn't sure.

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