Are other institutions currently pulling flood on lot loans? I know it's not required, but we're considering it because of the potential of having existing structures on the lot.

Well....that's sort of the thing. IF there are existing structures on the lot, then it IS required. If no structures, then it's not required. So can you just find out if there are structures or not? We pull if we know there are structures. We don't pull on bare land.

What kind of structures do you pull on? Do you pull on structures like sheds that you know won't be securing the loan?

It depends on what you mean by a shed.....if you mean a tin shed that can be picked up and thrown on a trailer, no. But if it meets the definition of a structure per FEMA, then yes. What do you mean by "structures...that you know won't be securing the loan"?

I meant essentially what you said like a tin shed that can be moved and thrown on a trailer as not securing a loan. So it sounds like we're on the same page. Thanks!

we pull the county assessment profile and if there is a value in the improvements column, we pull flood; if no value, no flood for lot loan

Sort of a dangerous practice. Do you not actually do an evaluation or an appraisal? Does someone not actually put eyes on the property to determine if there are improvements or not or worse yet impediments to value? Nothing like loaning money on the next super fund site.

We pull flood at time of preparing LE except for Lot loans. For Lot loans, we pull the county property profile and if they list no improvements, then we don't pull flood on those at time of preparing LE. If loan is approved and we receive an appraisal/evaluation it is reviewed for existing improvements; if improvements exist, then we will pull flood for Lot loans. Lot loan portfolio is small....this keeps the production line moving.

Do you not charge the borrower for the flood determination pull? Just asking, since you say that you are pulling flood at the time of LE preparation, and without an ITP, it would seem problematic to turn around and charge them for the flood determination.

It would be a changed circumstance if they did and that is how they were handling it. When you are collecting the fee and ITP is a totally separate issue.

It sounded like they were pulling floods at the time of issuance of the LE on applications that they KNOW have structures on them. Wouldn't that be a problem (unless of course, the bank is eating the cost of flood pulls as a cost of doing business)?

"We pull flood at time of preparing LE except for Lot loans."

(emphasis mine)

Raitchjay - you got it; cost of doing business.....we only have 1 loan in our portfolio that is in a sfha...that tells you what kind of volume we work with here. Lot loans very rarely have an existing structure that we experience here in this area of the PNW...lots of rural, hunting and farm land. No built shops, sheds, pump houses, affixed mobile homes or the likes just sitting randomly on a lot. It could happen but so far so good in this 'neck of the woods'.

If they never get an ITP, yes, they would eat it and unless they had the customer sign some sort of agreement that they would be responsible for any fees if the loan does not close, they would likely eat it too if the loan never closes. But TRID does not prevent the bank from ordering anything prior to the ITP.

You know...i had always thought that "incur" was the word used in 1026.19......but it's "impose". Glad we had this talk i guess.

In addition to the legal/regulatory obligations (if any), consider the financial impact on the borrower if the dirt might be in a flood zone. If the borrower's paying a market price for the unimproved land (anticipating the addition of a structure), but then it's later discovered that the land is in a flood zone, would resale at a loss have a material impact on the borrower's ability to repay? If so, I'd rather know about it up front so I could help the borrower avoid a potentially costly mistake.