What is the best way to determine that there are multiple buildings in a flood zone when there is no appraisal? Is asking borrowers and documenting their responses enough due dilligence? The issue we are running into is that we don't order a full appraisal on loans under a certain dollar amount. I told the line of business that every building located in a flood zone must be covered by flood insurance even if the value of the primary is sufficient to cover the loan amount.

Any thoughts/advice on how other lenders handle this situation is much appreciated.

If you are not ordering an appraisal on a property in a flood zone, you should at least be requiring the loan officer to conduct a site visit and take pictures.

Thanks Norman. I'm realtively new to flood compliance so was a little taken aback that this was an issue that had never arisen, but my first thought was to require an apprasial anytime the property is to be located in a flood zone. Is that a pretty common practice in the industry? I've been to flood seminars and listened to webinars and a lot of the focus is how to allocate coverage appropriately between multiple buildings and I hadn't heard this issue covered before.

I would definitely try and require an appraisal on properties in a flood zone. We order our determinations prior to ordering appraisals so that we can require a cost value approach on properties in a flood zone. You'll need those values if you ever enter a force-placed scenario.