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#2057154 - 01/07/16 03:22 PM Property newly mapped in SFHA
Jason L Offline
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WI
We just received a life of loan notification from our flood vendor that a property has been mapped into a flood zone. This is not a regular occurrence for us. I know we need to send notification to the borrower about the change and requirement to purchase flood insurance in order to begin the force place process.

I am questioning whether or not we need to provide the Notice to Borrower in SFHA as well. I believe this is only required for a triggering event, correct?

Also, I know that when the customer purchases the flood insurance they are not required to begin escrowing because this was not a triggering event. I assume we would have to provide them with the Notice of Option to Escrow when we notify the rest of our existing portfolio, which to my knowledge is a onetime requirement.

How would we handle remapping scenarios down the road after this mass Notice to existing customers? Do we need to provide the Option to Escrow Notice to those customers, or is this more of a conversation we should be having with the borrower to determine their preference?

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#2057162 - 01/07/16 03:49 PM Re: Property newly mapped in SFHA Jason L
Jade'sFire Offline
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Yaven IV
The notice to borrower will need to be provided (in a timely manner). I recommend sending 2 copies of the notice, with a return envelope so they can sign and return one for your records. (Since they often don't return them, you can also send this notice by certified mail. Then you would just keep the receipt of delivery in your file for proof that it was provided)

As for the option to escrow notice...that would be a Bank decision. It would not be required for a LOL map change, but you could extend the option to do so at that time.
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#2057196 - 01/07/16 05:53 PM Re: Property newly mapped in SFHA Jason L
David Dickinson Offline
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Central City, NE
Jade's reply is correct. I want to add:
1. Knowledge of a map change is a triggering event. It's not a MIRE, but "triggers" the requirements of notification & proper coverage.
2. You are not required to escrow because this wasn't a MIRE event, but you will be required to provide the option to escrow prior to 6/30/16.
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#2057276 - 01/07/16 09:21 PM Re: Property newly mapped in SFHA Jason L
Jason L Offline
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Joined: Feb 2011
Posts: 34
WI
Thank you to the both of you for your help!

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#2057663 - 01/08/16 11:16 PM Re: Property newly mapped in SFHA Jason L
Ninky Offline
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Ninky
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If we receive a map revision requiring insurance on an existing 1st lien after the required opt-in notification requirement date of June 30, 2016, what is the requirement? Say we make a 1st lien loan in March 2016, no flood insurance required. Then we receive a map change next October requiring flood insurance. Still not a MIRE, so we don't have to escrow, but do we have to offer the option? I don't recall it being required.

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#2057900 - 01/11/16 09:22 PM Re: Property newly mapped in SFHA Jason L
David Dickinson Offline
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David Dickinson
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Central City, NE
Good question. It's not a MIRE event, so you don't need to require the escrow. Technically, you don't have to send them a notice to escrow, because the loan wasn't in a SFHA on 1/1/16 (when the rules went into effect). I probably would. You're going to be giving them a Notice that states you escrow, so why not give them the option to do so? Again, I don't believe this is a requirement.
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#2059973 - 01/22/16 04:14 PM Re: Property newly mapped in SFHA Jason L
morirse de risa Offline
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Midwest
We just received a life of loan notification from our flood vendor that properties been mapped into a flood zone as well. Are there time frames we need to follow for this? How long do we have to provide the notices to the customer? How long does the customer have to get flood insurance in place?

Thanks so much for any help you can give me!

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#2060053 - 01/22/16 07:01 PM Re: Property newly mapped in SFHA Jason L
Dan Persfull Offline
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Bloomington, IN
How long do we have to provide the notices to the customer? How long does the customer have to get flood insurance in place?

You should have procedures in place begin your force place procedures within a reasonable time from when you receive the notice from your vendor. IMO no more than 5 calendar days would be reasonable. The borrower has 45 days to provide you a policy from the date you provide them the notice.
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#2091141 - 08/02/16 06:52 PM Re: Property newly mapped in SFHA Jason L
bamboozled Online
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Piggy backing on this topic and question as we also just had a flood vendor update a property that was previously not in a flood zone and know is. We will be sending the customer a letter requiring flood insurance from them within 45 days. However, do most force-place flood insurance to cover the bank's security during those 45 days?

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#2091146 - 08/02/16 07:04 PM Re: Property newly mapped in SFHA Jason L
rlcarey Offline
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Galveston, TX
That is a risk based decision. Most do not. The simple truth in that just because it has been mapped does not increase the chance of it flooding.
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#2091147 - 08/02/16 07:05 PM Re: Property newly mapped in SFHA Jason L
bamboozled Online
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Thank you!

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#2092941 - 08/12/16 03:17 PM Re: Property newly mapped in SFHA Jason L
Comply13 Offline
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Joined: Nov 2013
Posts: 51
USA
I have a question in relation to this topic. We have a new loan request to purchase a property that has been newly mapped into an SFHA within the last four months. There is no existing flood policy from the previous owner. The insurance company has provided us with an application for a PRP policy rated flood zone X (it has that the current zone is AE) and has stated that they can do this because it is a newly mapped property. Is this correct?

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#2093119 - 08/14/16 05:17 PM Re: Property newly mapped in SFHA Jason L
rlcarey Offline
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Galveston, TX
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