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#287477 - 12/10/04 07:22 PM Flood Certification
Anonymous
Unregistered

We have a new officer that is saying we should get a new flood certification when a loan renews. Even on HELOC's that renew yearly, he is saying we should get a new Certificate if the one in the file is 7 years old. Any thoughts on this? I really think it's not true because it isn't a new loan. Our certs are life of loan and we put in 30 years for the term on the cert when we order it.

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#287478 - 12/10/04 07:28 PM Re: Flood Certification
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
It's not true.
A lender may rely on a previous flood hazard determination concerning subsequent loans by the same lender with respect to the same property if three conditions are met:
1. The previous determination was documented on a SFHDF;
2. The determination is < 7 years old; and
3. No map revisions or updates affecting the secured property have been made.
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#287479 - 12/10/04 07:52 PM Re: Flood Certification
SouthoftheBorder Offline
Gold Star
Joined: Feb 2002
Posts: 335
The South
I have a similar situation here - our Ln Ops Mgr is saying that we need to get a new determination on each new loan regardless - (ie - we had a determination done 6 months ago & would get a new one today) We do purchase Life of Loan coverage - (obviously - some slick-talking vendor )- and the manager has said "If the flood map changes, the Bank must be notified. This is especially true once we start escrowing and therefore we need to get a new determination for each loan because if the first loan gets paid off, the tracking will stop".

HUH? and the 'escrowing' - I don't even know what that is about - can anyone help me with this?

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#287480 - 12/10/04 08:13 PM Re: Flood Certification
Dan Persfull Offline
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Dan Persfull
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Posts: 46,455
Bloomington, IN
I learned this from David - same property + same lender = same flood determination as long as it meets the 3 requirements.

The LOL coverage is supposedly your "safeguard" to be notified of map revisions.

I don't have any idea about the reference to escrowing, but some vendors track the loans by account number while others track by the address/legal description. What your Ln Ops Mgr may be trying to say is your vendor tracks by loan number, therefore if that loan is replaced with a new loan you lose your LOL coverage and you would have to obtain a new determination to reactivate the LOL.

At a previous employer the flood vendor tracked by account number. However, if we refinanced that loan we did not have to get "new" determination, we could "re-certify" the determination at a fraction of the cost of a new one.
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#287481 - 12/10/04 08:52 PM Re: Flood Certification
Beagles22 Offline
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Joined: Jan 2004
Posts: 3,626
State of confusion
What about a HELOC or another renewal that is past the 7 year mark, then should the lender be getting a new one even if it's really the same loan, just renewed?
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#287482 - 12/10/04 09:10 PM Re: Flood Certification
hij Offline
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Joined: Jun 2003
Posts: 168
Midwest
If you are renewing a loan and the original flood cert is 7 years old you need to get a new one. No Way, you stated in your original post that the lender said you had to get a new cert if the one in the file is 7 years old and you are renewing the loan. That is correct. You can't rely on a determination that is older than 7 years.

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#287483 - 12/10/04 09:45 PM Re: Flood Certification
Anonymous
Unregistered

Putting in 30 years on the cert when ordering doesn't really come in to play. It is FEMA Reg that governs the 7 year rule. We do LOL certs on all of our loans and when we renew the loan, we re-certify. This avoids the problem of date of last cert and also avoids worrying whether the map changed and the notification of change was misplaced, etc.

We also pull seperate certs for each loan (i.e. 1st mtg, 2nd mtg) simply because it is way too easy for someone processing a paid out 2nd mtg to terminate the cert and then we wouldn't have one at all

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#287484 - 12/10/04 09:53 PM Re: Flood Certification
hij Offline
100 Club
Joined: Jun 2003
Posts: 168
Midwest
Our flood vendor advised us that a re-cert is not a new determination so we would still have to make sure the original flood determination was less than 7 years old. In other words, the 7 year clock didn't start over with the re-cert.

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#287485 - 12/10/04 10:02 PM Re: Flood Certification
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,455
Bloomington, IN
I'm not sure I agree with your vendor. Especially if they issue a new cert with the date of recertification. If they do not issue a new SFHDF, then I would have to agree because the one you have in file would eventually become outdated.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#287486 - 12/10/04 10:02 PM Re: Flood Certification
Anonymous
Unregistered

Our outside auditors have always accepted a recert as starting the clock over. A re-cert is checking the map for any revisions and changing necessary info. Also according to FEMA reg...a NEW cert is required on any new loan

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#287487 - 12/10/04 11:23 PM Re: Flood Certification
Anonymous
Unregistered

Quote:

Our outside auditors have always accepted a recert as starting the clock over. A re-cert is checking the map for any revisions and changing necessary info.




If a new SHDF was issued then I would agree the clock starts new. But if a new SFHDF is not issued, then I would not. All three condiditions must be met, not just one or two. If a new SFHDF was not issued, the one you have in file will eventually be outdated.

Quote:

Also according to FEMA reg...a NEW cert is required on any new loan




You can find the following here (couertsy of David Dickinson): Federal Register August 29,1997 Vol 61 No 169

Two commenters pointed out that pursuant to section 1365 of the 1968 Act, a lender cannot rely on a previous determination set forth on a SFHD form when it makes a loan, only when it increases, extends, renews or purchases a loan. The agencies agree with this interpretation of section 1365 of the 1968 Act but note that subsequent transactions by the same lender with respect to the same property will be treated as renewals and will require no new determination .
The agencies adopt this provision as proposed.

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#287488 - 12/10/04 11:27 PM Re: Flood Certification
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,455
Bloomington, IN
The above is my post. I got logged out some how. And it should also say Federal Register August 29, 1996, not 1997.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#287489 - 12/11/04 12:34 AM Re: Flood Certification
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
That link brought back horrible memories, but thanks for the link. I had lost track of it over the years. I had to implement that at $50Bn bank. What fun that project was.
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#287490 - 12/13/04 01:53 PM Re: Flood Certification
Millie Offline
Junior Member
Joined: Apr 2003
Posts: 44
North Carolina
Was the loan ops manager stating that you need to order a new determination for renewals for for additional loans with the Bank? Our vendor stops tracking a property if they are aware it's being refinanced with another lender. If we only had one determination on file, we would lose tracking. Also, if you are escrowing funds for flood insurance, you need to be informed if the flood map changes. For example, if the borrower does not want to continue flood insurance coverage, he can terminate it since he is no longer in a flood zone. Perhaps he wasn't in a flood zone when the loan closed, however, due to map changes is now. You need to force place insurance if he doesn't get his own.

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#287491 - 12/13/04 10:42 PM Re: Flood Certification
Anonymous
Unregistered

She wants a new determination (cert) for each new loan on the same property...I don't think we are 'required' to tract 'life of loan' so I don't know what that would have to do with escrowing - we would terminate escrow if borrower informs us and then we determine property is no longer in a flood hazard area. Does RESPA state that we have to 'tract' if we are escrowing?

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#287492 - 12/13/04 10:43 PM Re: Flood Certification
SouthoftheBorder Offline
Gold Star
Joined: Feb 2002
Posts: 335
The South
OOPS! - the above was me - didn't realize I wasn't logged-in.

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#287493 - 12/13/04 11:28 PM Re: Flood Certification
Anonymous
Unregistered

If the loan was not in a flood zone when it closed AND the lender did not track for life of loan, how would you become aware it the flood map changes and the property is now in a flood zone?

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#287494 - 12/14/04 01:52 PM Re: Flood Certification
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,455
Bloomington, IN
Loan-A-ranger - RESPA has nothing to do with flood tracking. There is no requirement to track for map changes under the NFIP, however if you sell on the secondary market, the investor may require LOL tracking. Fannie and Freddie have such requirements.

If flood insurance is required, and if you have established an escrow for other expenses, then the NFIP requires you to also escrow for flood insurance. This may the concern.

Anon - If you did not engage in LOL tracking, you have to have a procedure in place to insure there were no map changes when renewing, extending, etc. the loan. You would not have responsibility under the NFIP to track for map changes.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#287495 - 12/14/04 05:57 PM Re: Flood Certification
corkygirl Offline
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Joined: Sep 2004
Posts: 4,241
middle of the country
I just changed our policy this year to require new flood determinations for renewals because the officers were not doing any due diligence to make sure there were no map changes on anything and we have grown enough that I know the officers can't be aware of map changes unless they investigate. The flood determination is not expensive, not in light of the cost if the map has changed and the collateral is now in a special flood hazard area. I didn't get much grief over this change, surprised me!!
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#287496 - 12/14/04 05:59 PM Re: Flood Certification
someone else Offline
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someone else
Joined: Aug 2004
Posts: 3,300
back to my roots
Happy Birthday CorkyGirl - just noticed the cake!
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