One of our loan officers made a construction loan for a church but did not have a flood search completed before the loan closing. Several days after the loan closed, a flood certification was received and it showed the property to be located in a flood hazard area. Other than sending the flood notice to the customer, what can be done in this situation? Can the borrower apply for a Letter of Map Change to show that the building is to be built on higher elavation and would not be affected by a flood?

You must send the notice immediately and if insurance is not obtained within 45 days you must force place it. They can apply for a LOMA, but flood insurance must be in place until the LOMA is issued.

In addition to Dan's comment - if a LOMA is granted by FEMA the owner (church) may be eligible to have their premiums paid thus far refunded. Call NFIP for more info on that - 800-427-4661.

Dan's exactly right. Take advantage of this "opportunity" to provide training on Flood Insurance. Be sure to visit the BOL Flood CMP page. This should scare the heck out of most loan officers.

David: The church is now wanting us to accept a plat showing elevations and that the church is not being built on the portion of the property shown to be in the flood area. Will this be acceptable or would the LOMA from FEMA be required in this case before construction begins with bank funding?

If the entire property is not located within the SFHA, then the submission of the plat showing the construction will be outside the SFHA to your vendor should suffice. However, if the entire plat is within the SFHA, then FEMA will have to issue the LOMA before you fund the loan, or you must obtain flood insurance until the LOMA is issued.

Call your vendor and discuss the situation with them. They should be able to guide you in the right direction.

You said "the church is not being built on the portion of the property shown to be in the flood area". If the church is truly not in a Special Flood Hazard Area (SFHA) then they don't need flood insurance.

You cannot view elevations as a way to get out of these requirements. You (everybody except FEMA) is stuck with looking at a 2-dimensional view of the map (North, South, East, West). If it's in, it's in. The applicants can apply to FEMA for a LOMA or LOMR which is a 3-dimension determination (considering elevation). If FEMA states that the building is not located in a SFHA, then you don't have to purchase flood insurance. Until then, it is required. You cannot close the loan without having flood insurance in place or a LOMA/LOMR from FEMA.