I have an Indirect Mfg Home Loan, in Louisiana, with a current balance is $123,000. Borrower is in Chapter 7 Bankruptcy. Property is now deemed to be only worth $48,000 to the bank (net of costs). N.A.D.A. value of home deemed to be about $95k with no current inspection at this time. Borrower used to cover property with $118,000 of flood insurance. Land securing the loan is valued at about $7,000 at this time.I would guess flood should be forced placed still for $118,000 short of any current info. Any other ideas?

Any help would be appreciated on this one.

Minimum coverage is the lesser of:

The insurable value of the property located in the SFHA
The outstanding principal balance of the loan secured by the property
The maximum available through the NFIP.

What the property is worth to the bank through their accounting is not relevant.

Along the same line as this topic. Please help me unfog my memory banks. When force-placing, shouldn't you include the premium that will be added to the loan balance to the 'outstanding principal balance' when calculating coverage??

Yes, if you can increase the balance under your loan agreement, however since this borrower is in bankruptcy, I would not automatically do this without blessings from my legal counsel.

(luckily, the one I'm looking at is close...but not in bankruptcy) Good point on that tho!

Thanks everyone. This was a good question and taught my group a valuable lesson.