We have a different situation that I am hoping someone can help me with. We are doing a loan for a customer and on their property is also a mobile home that their son lives in. We are NOT taking the mobile home on our loan. The portion of the property that our customer's home is on is not in a flood zone. The portion of the property where the son's mobile home is on is in a flood zone. Are we required to make our customer get flood insurance?

Great question. There are two different structures here so let's look at each. First, you say that the "customer's home" is not in a (high-risk) flood zone. Therefore, flood insurance is not required on this structure.

Next, we have a mobile home that is located in a high-risk flood zone, but is not taken as collateral. If the structure (i.e. mobile home) is not taken as collateral, you do not need to get flood insurance on your loan. That said, you will want to ensure that the mobile home is titled (and you aren't taking the title as collateral) - otherwise, if the title has been surrendered, it actually becomes part of the real property, meaning that it technically would become collateral requiring flood insurance.

So to answer your question, no, you do not need to require flood insurance due to flood insurance rules. Requiring it as a Safety and Soundness concern, however, is another question.

I agree with Adam's comments and just want to add: I would tell the customers about what you know. They are not required to purchase flood insurance to receive the loan from you. However, they may not realize the MH is in a SFHA. I would inform them of this.

Another question in regards to multiple buildings. One parcel of land has primary residence and another 1-4 family residence on the same property. All of the property is in a SFHA.

Loan amounts for example,
First lienholder = $500,000
Junior lienholder = $150,000

First lien bank only required $250,000 of flood insurance. Would you need 250,000 per residential structure for a total of $500,000 of flood insurance coverage.

What are the insurable values of the structures.

One parcel of land has primary residence and another 1-4 family residence on the same property. All of the property is in a SFHA.

If both residential structures are located in the SFHA then each structure must be insured.

The minimum coverage requirement would be the lesser of:

The insurable value of all structures located in the SFHA
The outstanding principal balance for all loans secured by the structures located in the SFHA, or
The maximum coverage available through the NFIP for the structure types located in the SFHA. ($250,000 per residential structure, $500,000 per non or other residential structure)

Yes, both have an insurable value over the $250,000 maximum coverage available meaning it would need $500,000 of insurance coverage ($250,000 per residential structure).