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#2033445 - 08/13/15 01:07 PM Maximum Deductible
Joanna Offline
100 Club
Joined: Sep 2013
Posts: 102
Is there a maximum deductible on a residential 1-4 mortgage? Or is it a safety and soundness issue for the bank to decide if the borrower can pay the higher deductible?

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Flood Compliance
#2033835 - 08/14/15 07:49 PM Re: Maximum Deductible Joanna
LillyNY Offline
Junior Member
Joined: Aug 2012
Posts: 48
Central NY
I would say both. The maximum deductible on a residential flood insurance policy is $10,000 but for safety and soundness reasons, my bank allows just the lesser of 5% of the face amount of the policy or $5,000.

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#2033891 - 08/15/15 12:12 AM Re: Maximum Deductible Joanna
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
There is a maximum deductible on NFIP policies. It's up to the bank (not the borrower) about what deductible the borrower can take.

…it is not a sound business practice for a lender to allow the borrower to use the maximum deductible amount in every situation. A lender should determine the reasonableness of the deductible on a case-by-case basis, taking into account the risk that such a deductible would pose to the borrower and lender. [Interagency FAQ #17]
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David Dickinson
http://www.bankerscompliance.com

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