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#1844498 - 08/21/13 04:36 PM Flood Zone on Appraisal
Bank_Auditor007 Offline
New Poster
Joined: Jun 2013
Posts: 19
Kentucky
After attending a lending compliance seminar, I made a note to check the appraisal against the flood determination to be sure they are in agreement on loans that require flood insurance. Of course, there are a few in my sample that do not agree.

Two questions: 1. I do not see where this actually violates anything in the Flood Disaster Protection Act, am I right?

2. I see this as more of an assessment of the appraiser's work quality. Am I missing any obvious issue though?

Obviously it was important enough to mention at the seminar, but I am really struggling with how to even report this as a possible audit finding.

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Flood Compliance
#1844560 - 08/21/13 06:19 PM Re: Flood Zone on Appraisal Bank_Auditor007
Dani York, CRCM Offline
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Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
We compare the zone on the appraisal to the zone on the determination as a data integrity check of our flood vendor (part of ongoing due diligence), as I have found issues with our flood vendor in the past making a determination of X on properties in A. The following is an excerpt from our flood procedures on what to do with the results of the comparison:

As part of an ongoing vendor due diligence process to test data integrity, flood determinations will be compared to information in the appraisal report in file. By comparing the information on the flood determination to the flood information in the appraisal report and reconciling any differences, the bank will be assured that the determination is correct and can be relied upon. Loan personnel will compare the zone on the determination with the zone listed in the appraisal report. If the zones match, the determination can be relied upon as accurate. If the zones do not match, additional research will be conducted by loan personnel or the compliance officer using FEMA’s online Map Service Center to reconcile the difference. Additional information will be supplied to the flood determination vendor for a revised determination when necessary. At times, the reconciliation may find that the determination is correct and the appraisal is not. In those instances, a comment in the file is sufficient to document the findings.
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I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

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