Thread Options
|
Tools
|
#218254 - 07/30/04 04:27 PM
Mutliple propeties & flood required
|
Anonymous
Unregistered
|
I am having trouble finding guidelines addressing specifics on coverages required when using multiple properties on a loan and flood coverage. I have one property that is in the zone, and one that isn't. I have looked at the Mandatory Purchase of Flood Ins. book, and have searched as well here but unless I am missing it, can't see to locate anything on the subject. If someone could point me in the right direction I would appreciate. Thanks
|
Return to Top
|
|
|
|
#218255 - 07/30/04 04:52 PM
Re: Multiple properties & flood required
|
10K Club
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
|
Your coverage requirements are the same.
You must have coverage for the least of:
The maximum coverage available under the NFIP for the structure type - residential or non-residential;
The unpaid principal balance of the loan;
The value of the property less the land value. (In the case of multiple structures each has to be insured either to its value, or if the values exceed the outstanding principal balance they have to be insured (allocating coverage to each structure) to cover the loan's outstanding principal balance.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
|
Return to Top
|
|
|
|
#218256 - 07/30/04 04:52 PM
Re: Mutliple propeties & flood required
|
100 Club
Joined: Apr 2003
Posts: 249
Chaos
|
Look at page 23 of the Mandatory Purchase Guidelines under the section on "Calculating Coverage"
"The lending regulations provide that, in addition to the statutorily prescribed dollar limits, flood insurance coverage under the NFIP is limited to the overall value of the building. Accordingly, a lender must evaluate the amount of coverage required in relation to the portion of the loan that is associated with the improved real estate (excluding the appraised value of the land), or the maximum amount of insurance available under the NFIP, whichever is less."
You can also find the regulatory reference at 12 CFR 208.25(c)(1)
_________________________
DON'T PANIC
|
Return to Top
|
|
|
|
#218258 - 07/30/04 05:13 PM
Re: Mutliple propeties & flood required
|
Anonymous
Unregistered
|
Thanks to all for the reply. David here is the case senerio, its goofy to start with so maybe that is why I am having trouble getting my hands around it.
These two propertied were purchased by a local housing authority. They received a state grant for 75% of the purchase price and had us finance the rest.
Property 1 Appraised value 57,000 site value 10,000 not in flood zone
Property 2 Appraised at 49,500 site value 10,000 in flood zone
our loan a whopping $15,000
|
Return to Top
|
|
|
|
#218259 - 07/30/04 05:43 PM
Re: Multiple properties & flood required
|
10K Club
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
|
Property 2 ; 49,500 - 10,000 = 39,500 structure value.
Outstanding loan balance = 15,000
Coverage required 15,000.
Property 1 - not in SFHA therefore no flood insurance requirements.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
|
Return to Top
|
|
|
|
#218261 - 09/13/05 09:39 PM
Re: Multiple properties & flood required
|
Power Poster
Joined: Jan 2003
Posts: 3,070
Oklahoma
|
Need help. I have researched! I just seem to not be able to absorb anymore today.
You have a loan for $38,900.
Property A is not in a flood zone valued for $40,000
Property B IS in a flood zone value at $8,000.
How much flood insurance is required on this loan? Any help is appreciated.
_________________________
Just working here until I get my letter from Hogwarts.
|
Return to Top
|
|
|
|
#218262 - 09/13/05 09:56 PM
Re: Multiple properties & flood required
|
Power Poster
Joined: Dec 2002
Posts: 4,615
SC
|
I'll go with 8,000 - lesser of the principal balance of the loan vs the appraised value of the improvements
_________________________
|
Return to Top
|
|
|
|
#218263 - 09/13/05 10:06 PM
Re: Multiple properties & flood required
|
10K Club
Joined: Sep 2002
Posts: 13,965
TN
|
Cowboy Fan I believe you are correct.
_________________________
My Opinions Only
|
Return to Top
|
|
|
|
#218264 - 09/13/05 10:47 PM
Re: Multiple properties & flood required
|
Power Poster
Joined: Jan 2003
Posts: 3,070
Oklahoma
|
That is what I thought, but I don't believe myself today. Thanks alot, your quick help is wonderful.
_________________________
Just working here until I get my letter from Hogwarts.
|
Return to Top
|
|
|
|
#647591 - 12/05/06 10:59 PM
Re: Multiple properties & flood required
Skittles
|
Member
Joined: Mar 2002
Posts: 98
|
Are the Flood experts still out there?
Loan amount is $270,000.
Property 1 is not in flood area and has a value of $114,000. Property 2 is in a flood zone and the improvement value is $120,000. Additional collateral is inventory stored in property 2 valued at $100,000.
What do I need for flood insurance? I'm stumped!
|
Return to Top
|
|
|
|
#647601 - 12/05/06 11:22 PM
Re: Multiple properties & flood required
run4fun
|
10K Club
Joined: Nov 2000
Posts: 18,762
Central City, NE
|
Disregard property 1 since it is not in a flood zone. It will not factor into the "how much" calculation.
Banks must insure that borrowers purchase flood insurance coverage at least equal to the following minimums: 1. Outstanding principal balance of all loans secured by the property;
2. The appraised value of the property minus the land value (the improved property value); and
3. The maximum insurance available under the principal flood insurance program (generally $250,000 for dwellings and $500,000 for non-dwellings) and $100,000/500,000 in contents, respectively.
You don't say if these properties are dwellings are not, but it won't be a factor here (unless the community is in the emergency program). Here's your factors: LA = $270,000 AV = $120,000 + $100,000 in contents Maximum = $250,000 / $500,000
Therefore, you need $120,000 in flood insurance on the structure and $100,000 on the contents.
|
Return to Top
|
|
|
|
|
|