My Bank is making a loan to purchase a 4 lot mobile home park. One of those pads is empty, while the other 3 will require flood insurance. The appraisal returned the NADA value of the mobile homes as follows: $ 2,466, $ 2,483, and $ 12,080 or $ 17,029 total for the mobile homes.

The insurance agent said the value of the first two mobile homes was less than the deductible of $ 2,500 each. (they were both manufactured in 1975), but the third mobile home for $ 12,080 could be insured.

I know the interagency FAQs permit not purchasing flood insurance when the building is worth less than the minimum deductible.

However, is there any other valuation method the Bank can use for these two mobile homes?

Thank you in advance.

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You can use any good faith determination of value. Hazard insurance (although it can be like comparing apples to oranges), replacement cost, actual cash value, tax assessment, etc.

You say the deductible is $2,500. The NFIP deductibles are as follows:

Pre-FIRM (Flood Insurance Rate Map):

A.) Flood Insurance equal to or less than $100,000.00 = $1,500.00
B.) Flood Insurance greater than $100,000.00 = $2,000.00

Post-FIRM (Flood Insurance Rate Map):

A.) Flood Insurance equal to or less than $100,000.00 = $1,000.00
B.) Flood Insurance greater than $100,000.00 = $1,250.00

Is the agent using private insurance that has a higher deducible than the NFIP's?

Thank you for the response.

The agent is using NFIP.

If they are using NFIP insurance, ask the agent how they arrived at a deductible of $2,500? IF the value of the property was more than the minimum deductible the customer could choose $2,500, but you can't let a higher than minimum deductible rule out the purchase of insurance. In other words, the agent must lower the deductible (down to the minimum) so that there is some coverage.

I would also ask the agent what value they have for the 2 mobile homes.

Ok, thank you again.