We have a situation where they want to close a loan this week, and the flood cert was just pulled two days ago. So, the reasonable period before closing is coming into play (we are still waiting on the policy). If the ALTA survey was completed weeks ago and the borrower knew the property was in a flood zone, could the ALTA survey qualify under the Alternate Method of Notice provision in the FDIC's Flood rule 339.9? I just don't know that a survey would qualify as a "satisfactory written assurance from a seller or lessor that, within a reasonable time before the completion of the sale or lease transaction, the seller or lessor has provided such notice to the purchaser or lessee".

(e) Alternate method of notice. Instead of providing the notice to the borrower required by paragraph (a) of this section, an FDIC-supervised institution may obtain satisfactory written assurance from a seller or lessor that, within a reasonable time before the completion of the sale or lease transaction, the seller or lessor has provided such notice to the purchaser or lessee. The FDIC-supervised institution shall retain a record of the written assurance from the seller or lessor for the period of time the FDIC-supervised institution owns the loan.

They gave them a copy of the Notice of Special Flood Hazards and Availability of Federal Disaster Relief Assistance ???

If the borrower produces a policy before loan closing, how can the notice not have been given to them reasonable time before the completion of the transaction?


And figure out where the breakdown in your processes occurred.

The Notice of Special Flood Hazard disclosure was given to the customer yesterday. I've read all the posts on the 10-day vs reasonable time before closing, and I agree- if they got the notice before closing and produced a policy, it should suffice. But, if we were to have a regulator question the 10 days, I'd like to have all the bases covered. Our attorney asked about the alternate method of notice, so I'm trying to understand if anyone has used this, and if so, what exactly did it entail?
Thanks.

The third party has to have actually give the Notice of Special Flood Hazard disclosure to the customer. Not deliver a survey that just reflects the property in a flood zone.

Thanks Randy. I don't know how a seller (commercial company) would have access to a NSFH disclosure to provide one.