We have a loan with a shared 1st lien position with another lender. The amount of our original loan is $50,000.00. The amount of the other lender’s original loan is $50,000.00. These loans equal a total original amount of $100,000.00.

The amount of OUR outstanding loan balance is currently: $48,734.57.

Are we concerned with ALL outstanding liens on the property (including the shared 1st lien position with the other lender).

The replacement value of the property is $60,000.00, according to the property insurance ($50,000.00 for building and $10,000 for renovations).


The NFIP max is $500,000.00.

I see where a key point to remember is that a NFIP policy will not cover an amount exceeding a building’s insurance value, which, in our case, is the dwelling replacement cost of $60,000.00 .

What would determine the minimum requirement value for flood insurance?

(side note: we are also requiring a $10,000.00 for content coverage because we have a UCC on equipment).

First, I don't know how 2 lenders can have a "shared 1st lien position". One of you has to be 1st and the other 2nd - unless this is a participation.

Second, the Flood rules indicate the 1st lien holder need only worry about their loan balance. Subordinate lien holders need to make sure there is enough insurance to cover them and lien holders in superior position.

If you're truly in 1st position, you could require $60,000 (the insurable value of the building) but the regulation only requires you to have $48,800 (your loan balance rounded up to the next $100).

P.S. You mention the RCV of $60,000 but you also say the NFIP max is $500,000. That tells me this is a non-residential, primary dwelling. If so, you shouldn't be using RCV to determine the insurable value. Only dwelling policies pay RCV. General policies pay ACV. If you'd like to know more about this, read the article called "Flood Insurance Insurable Value" in the "Free Downloads" / "Lending Tools" at our website:
https://www.bankerscompliance.com

I just read a similar post where I explained RCV vs. ACV. You might want to look at this:
https://www.bankersonline.com/forum/ubbt...required#UNREAD