It is my understanding that an elevation certificate is now required by insurance companies for certain properties. Since banks must require flood insurance, and an elevation certificate may be required by the insurance company to obtain flood insurance, is the bank now required to disclose the cost of an elevation certificate on the GFE and HUD-1? If so, how should it be disclosed, and what tolerance category does it fall under? How will the bank know when an elevation certificate is required, and the amount to disclose? Our flood determination provider indicated that the cost of an elevation certificate could range from $600 to $2,500 per building.

is the bank now required to disclose the cost of an elevation certificate on the GFE and HUD-1?

I would say yes.

If so, how should it be disclosed, and what tolerance category does it fall under?

Block 6 and provide a list of preferred providers.

How will the bank know when an elevation certificate is required,

When they tell you they need one, which becomes a change in circumstance.

elevation certificate could range from $600 to $2,500 per building.

Call your selected providers and ask them

I'm not sure I agree. The elevation certificate is a cost associated with purchasing the insurance and it would be required regardless if the flood insurance is being purchased as a result of a loan or if the homeowner just wanted their home protected against a flood.

Opinions?

Well, my thought process is that the bank is requiring the flood insurance, so that all fees associated with the purchase of such is required to be disclosed.

The bank requires title insurance - sometimes a survey is necessary to issue that.........

Being right smack dab in the middle of this mess, I am waiting on guidance from the compliance company we pay big bucks to advise us on these things. My head says "no" just for those reasons that Dan gave and also that not all insurance companies are asking for them just yet. Some of the insurers that I have spoken to are waiting to give the borrower the bad news next year when the policy renews if its Pre-Firm or an all inclusive insurance. FYI, there is a flyer out there titled "A Homeowner's Guide to Elevation Certificates." It says that sometimes a homeowner may be able to obtain that elevation information from their community. We have found that communities are unwilling to complete the Elevation Certificate if they have the information.

I fully understand that thought process and not 100% against it.

Just throwing something out there for discussion.

Well, I'm not 100% sure either and it was an off the cuff answer. However, if the big buck consulting firm points to any guidance and comes up with a better answer than I, please share as I doubt that there is any, so it will be nothing but someone's opinion. It just seems to me that if you require the insurance to get the loan, then all costs associated with the process to get the insurance is part of the loan transaction.

The law of unintended consequences strikes again. There have been numerous articles in the press down here, as you can probably expect, these flood changes are going to hit pretty hard. I didn't look up one of the claims, but it was said that a sale on a house fell through right after the new buyers found out that the flood insurance premium on the prospective new house they had put a bid on was going to be $40,000. Elevation certificates are going to be the least of the worries for some new home buyers or sellers for existing homes that are currently in a flood zones.