We are fortunate to live in an area that (so far) does not have any REM's in a flood zone, so I'm sure we're not as familiar with the FDPA as we should be...

I was recently looking at the FDPA. A few things caught my eye and raised some questions:

I saw something about Life of Loan flood determinations. Are these required, or if we determine that the RE is not in a flood zone at the time of the loan closing, is that enough?

It also says we can rely on a previous flood determination for a specific property if it's less than 7 years old (if recorded on the new form)? I assume this applies even when extending any new credit against that property?

It mentions flood insurance being required for extensions. If this includes deferrals, do we need a new flood determination if we extend a payment on a term note secured by improved RE?

Thank you guys for your help!

Life of Loan coverage is a business decision

Yes - an FHD can be re-used for 7 years as long as you verify and document that the flood map has not been updated.

MIRE - Make, Increase, Renewal, Extend are the triggers. Deferring a payment unless you are also extending the maturity of the loan is not a trigger.

Typically when we defer payments we also extend the maturity, so I'll be sure we get new flood determinations on those.

Thanks for your help!

Also note - if the property is within an SFHA you need to have the notice signed as well in a MIRE situation.

Thanks for the feedback guys! Much appreciated.

One more question - someone had asked me to determine whether or not we could deny a loan (commercial and/or consumer), just because it was identified as being in a special flood hazard area. I think the fear is that we may have difficulty complying with the FDPA, since we've never had a property in an SFHA before.

I assume the answer to this is "no," but thought I'd ask to be sure. Thanks!

While it may be acceptable - you would have to do it with ALL properties within an SFHA for fair lending; however what will you do if you have a loan on a property that isn't within an SFHA when originated and later the maps change and the improvements are now within an SFHA?

I would not be a proponent of this plan.

There are companies out there that can do the letters, force placing, monitoring for your financial institution. Maybe that is something to consider.

Yes - and you may also end up with redlining issues depending on who lives in the flood zones in your area based on such a policy.

Very good points. I will recommend we do NOT deny a loan based on being in a SFHA, should it ever come up. Thanks for the input!

Definitely a risk, according to this Bloomberg - Redlined, Now Flooding.