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#2232164 - 03/02/20 09:18 PM Flood Q & A 7 if it knows or has reason to know
liventhedream Offline
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Flood Q & A 7 reads: Is a lender required to perform a review of its, or of its servicer’s, existing loan portfolio for compliance with the flood insurance requirements under the Act and Regulation?
Answer: No. Apart from the requirements mandated when a loan is made, increased, extended, or renewed, a regulated lender need only review and take action on any part of its existing portfolio for safety and soundness purposes, or if it knows or has reason to know of the need for NFIP coverage. Regardless of the lack of such requirement in the Act and Regulation, however, sound risk management practices may lead a lender to conduct scheduled periodic reviews that track the need for flood insurance on a loan portfolio.

Can anyone point me to what is ment by "if it knows or has reason to know" as state above. Does this mean if for some reason a new insurable value it gotten during the life of the loan (not a MIRE event) the bank would have to start the force place process?

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Flood Compliance
#2232168 - 03/02/20 09:28 PM Re: Flood Q & A 7 if it knows or has reason to know liventhedream
rlcarey Online
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rlcarey
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Galveston, TX
That is really targeted to lenders that have life of loan coverage that are notified by their FHD provider when a property moves into a flood zone via a remapping event.

What sort of event would create a significant change in an insurable value?
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#2232170 - 03/02/20 09:45 PM Re: Flood Q & A 7 if it knows or has reason to know liventhedream
liventhedream Offline
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What sort of event would create a significant change in an insurable value?

answer: the property could be re-appraised for safety and soundness reasons and cause the value of to increase some. there was not true MIRE event.

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#2232171 - 03/02/20 09:55 PM Re: Flood Q & A 7 if it knows or has reason to know liventhedream
rlcarey Online
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rlcarey
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Galveston, TX
Well, market value in the new appraisal and RCV or ACV are two different things. Unless there was some reason that the lower of insurable value, loan amount or available flood insurance was the insurable value, then I guess you might have an issue. But it would be pretty unusual I would think.
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