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#2271150 - 06/02/22 08:26 PM Is this a "same borrower" for using prior certs
Compliance504 Offline
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Joined: Dec 2008
Posts: 702
Tennessee
According to Flood Q&A #4....it is permissible to use a prior flood determination for multiple loans to the same borrower secured by the same property (if the conditions are met)......my question is about "same borrower"....

We made a loan to ABC LLC in April secured by 90 rental properties...now, 2 months later, we are doing a letter of credit to DEF LLC secured by the same rental properties....these two LLCs are single member LLCs with the same person as the sole member.....

Can we consider these two sole member LLC with the same person as the sole member as the "same borrower" for purposes of using prior flood determinations?

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#2271152 - 06/02/22 08:36 PM Re: Is this a "same borrower" for using prior certs Compliance504
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,926
Galveston, TX
These loans are extended by the same lender, to the same borrower, and are secured by the same improved real estate, and, therefore, these types of transactions are the functional equivalent of an increase of a loan.

You are not meeting these requirements and I doubt your contract with your FHD provider would allow it either.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2271154 - 06/02/22 08:40 PM Re: Is this a "same borrower" for using prior certs rlcarey
Compliance504 Offline
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Joined: Dec 2008
Posts: 702
Tennessee
Thank you Randy....I knew it was a long shot...but thought I'd ask......

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#2271156 - 06/02/22 08:46 PM Re: Is this a "same borrower" for using prior certs Compliance504
Compliance504 Offline
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Joined: Dec 2008
Posts: 702
Tennessee
If the letter of credit is made to the same LLC that we made the loan to in April, then we can rely on the prior cert....

That is how I understand it,,.is that correct?

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#2271158 - 06/02/22 08:49 PM Re: Is this a "same borrower" for using prior certs Compliance504
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,926
Galveston, TX
Yes - after you verified that none of the existing maps had been updated in the meantime. Also, if your FHD vendor allows it.

If you have any life of loan coverage, that original FHD is usually only good for that original loan.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2271160 - 06/02/22 09:31 PM Re: Is this a "same borrower" for using prior certs Compliance504
Compliance504 Offline
Platinum Poster
Joined: Dec 2008
Posts: 702
Tennessee
Thanks, Randy....we do not use life of loan determinations.....do I still need to verify with our FHD vendor?

I had not heard that piece before....

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#2271167 - 06/03/22 11:19 AM Re: Is this a "same borrower" for using prior certs Compliance504
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,926
Galveston, TX
Read your FHD vendor contract. very carefully. Re-use of a FHD for a different borrower or a different loan might void your warranty that they provide, which then makes your FHD worthless.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2271186 - 06/03/22 04:11 PM Re: Is this a "same borrower" for using prior certs Compliance504
Compliance504 Offline
Platinum Poster
Joined: Dec 2008
Posts: 702
Tennessee
Thanks for bringing this to my attention, Randy.....we will review with our vendor....

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