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#1974750 - 11/06/14 03:51 PM AE vs. VE
Piano Man Offline
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Down South
We have a request for a condo located in Miami. Our flood vendor shows the property in zone VE. I pulled the map from FEMA and it shows the property in VE. However, the insurance shows zone AE. What do I do?
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Flood Compliance
#1974765 - 11/06/14 04:04 PM Re: AE vs. VE Piano Man
RR Joker Offline
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I would say you have a problem. If memory serves me, VE has to do with additional wind velocity and is higher rated than AE is.
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#1974790 - 11/06/14 04:21 PM Re: AE vs. VE Piano Man
David Dickinson Offline
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AE and VE are not equivalent. This is a zone discrepancy.
1. Contact your flood vendor and have them recheck. If they still believe it is VE, have them show proof (i.e. map overlays).
2. Forward this information to the insurance agent and ask them to recheck.
3. If the agent won't line up, show them this:
If, despite these efforts, the discrepancy is not resolved, or in the course of attempting to resolve a discrepancy, a borrower or an insurance company or its agent is uncooperative in assisting a lender in this attempt, the lender should notify the insurance agent about the insurer’s duty pursuant to FEMA’s letter of April 16, 2008 (W– 08021), to write a flood insurance policy that covers the most hazardous flood zone. [Interagency FAQ #71]
NFIP W-08021: www.nfipiservice.com/pdf/bulletin/w-08021.pdf
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#1974813 - 11/06/14 05:02 PM Re: AE vs. VE Piano Man
RR Joker Offline
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The Swamp
And FWIW, I can't think of a condo I've done near the coasts of FL that weren't V rated.
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#1975390 - 11/07/14 10:48 PM Re: AE vs. VE Piano Man
searchin Offline
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My understanding is that as long as the policy and the determination are both high risk (A / V), then no further action is needed.

Take a look at the FAQ regarding discrepancy. I'm interested in the interpretation of others on this.

http://www.bankersonline.com/tools/flood_faq_2011_10_17.pdf
71. What should a lender do when there is a discrepancy between the flood hazard zone designation on the flood determination form and the flood insurance policy?
[Answer:] A lender should only be concerned about a discrepancy on the Standard Flood Hazard Determination Form (the SFHDF) and the one on the flood insurance policy if the discrepancy is between a high-risk zone (A or V) and a low- or moderate-risk zone (B, C, D, or X). In other words, a lender need not be concerned about subcategory differences between flood zones on these two documents. Once in possession of a copy of the flood insurance policy, a lender should systematically compare the flood zone designation on the policy with the zone shown on the SFHDF. If the flood insurance policy shows a lower risk zone than the SFHDF, then lender should investigate.

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#1975394 - 11/07/14 11:15 PM Re: AE vs. VE Piano Man
rlcarey Online
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Well, what that is saying is that as long as the policy is written for an A zone and the determination zone is an A zone - regardless of subcategory, i.e. AE, then you are fine.

A policy in A and a determination in V is not acceptable.
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#1975405 - 11/08/14 02:12 AM Re: AE vs. VE Piano Man
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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The V zone is vastly different from an A. V is as risky as it gets, ocean front, etc. and is not the equivalent of an A.

The comment in the FAQ is not saying that A and V are equivalent, it is saying that you don't have to worry about the "sub zone", the level of A or V, just worry that you have an A or a V, vs a B, etc.
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#1975691 - 11/12/14 03:11 PM Re: AE vs. VE Piano Man
Piano Man Offline
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Thank you all for the comments. I just wonder if we are missing something. This is the second condo in Florida where our flood vendor shows a VE zone and the insurance is an AE zone. I even went as far as pulling the map myself and the property is clearly in a VE zone. How would other banks financing condos in the same unit get around this?
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#1975731 - 11/12/14 04:46 PM Re: AE vs. VE Piano Man
John Burnett Offline
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Two possibilities from my perspective: (1) The insurance agent doesn't understand the rules (not unusual, from what I've read; it's complex stuff); or (2) the agent understands the rules but is getting real or imagined pressure from the client (your borrower) to reduce costs and figures to sneak the lesser coverage under your nose.
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#1976368 - 11/14/14 02:36 PM Re: AE vs. VE Piano Man
Piano Man Offline
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Down South
We have contacted the insurance company and they were not at all helpful or willing to change anything. We also let our borrower know that he will need to purchase additional insurance coverage. Do we just require coverage as normal with a policy show VE and ignore the association policy?
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#1976369 - 11/14/14 02:38 PM Re: AE vs. VE Piano Man
rlcarey Online
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You cannot as any dwelling policy the borrower buys will only be co-insurance to the RCBAP. Looks like the only viable option is passing on the deal.
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#1976721 - 11/17/14 03:25 PM Re: AE vs. VE Piano Man
Piano Man Offline
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Piano Man
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Down South
I think we are fixing to talk to the insurance agent, but I want to make sure I understand everything.
1. FEMA's map shows VE
2. No amendments or changes have been issued from FEMA changing the zone.
3. The insurance policy should show zone VE.
4. My customer cannot purchase additional insurance to correct the issue.
5. Only a corrected insurance policy or passing on the request will fix my issue.

I hate flood!
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#1976884 - 11/17/14 07:46 PM Re: AE vs. VE Piano Man
Piano Man Offline
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Piano Man
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Down South
So, I spoke with the insurance agent, and he stated that as long as we have an elevation certificate showing AE, our flood determination is incorrect. I personally don't agree with that, but anyway. I also called FEMA's map assistance and they stated that I can close the loan with differing zones if my policy allows it? This is all against everything that I have learned about flood insurance.
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#1976887 - 11/17/14 07:49 PM Re: AE vs. VE Piano Man
rlcarey Online
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Galveston, TX
The agent is an idiot. Elevation has nothing to do with what zone the property is in. Also, FEMA is not your regulator.

Send them both this:

http://www.nfipiservice.com/pdf/bulletin/w-08021.pdf
Last edited by rlcarey; 11/17/14 07:55 PM.
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#1976924 - 11/17/14 08:57 PM Re: AE vs. VE Piano Man
Piano Man Offline
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Down South
From the Insurance Agency:

To best reply, there is no flood zone discrepancies. Part E applies. You have a Flood Zone Determination. We have an Elevation Certificate. The zone and map are correct on the Elevation Certificate. The zone and the map are the same.

There are no discrepancies. We do not have a change in map, a difference measured by different Elevation Certificates. A surveyor using equipment on the ground, at the building has confirmed the zone, map, community number, panel number, and suffix. You are not the first bank to question the flood zone determination overlay and GPS. In these cases E. Different BFE Report, has prevailed. We cannot re-rate the building for one bank loan.

I have an entire condominium association and all of their mortgages to deal with. While there is the LODR process, I am not going to be able to change the flood policy for an individual unit, and I cannot support your claim. This has gone to the BOD, the other mortgagees, and owners, and consistently, the elevation certificate rules.
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