I have 2 pieces of property securing a loan. Property #1 has 3 mobile homes valued at a total of $13,700 and Property #2 has 3 mobile home valued at a total of $7400. The lender wants to exclude the MH's from collateral and therefore concludes a flood cert is not needed. What do you think? Does it matter if they are permanently affixed?

I think we need to do flood certs, what do ya'll think?

If the MH's are permanently affixed - you most definitely need to do the certs. If they're not, I think you could make the decision to NOT take them as collateral, and effectively have vacant land as your security - which would mean you wouldn't need a flood cert.

you need flood determinations done.

Is the LO deducting the values of the MHs to calculate the appropriate LTV?

If you do not take a security interest in the MHs then flood would not apply. As for as being permanently affixed you would have to look to state laws to see if the MHs would be considered "real" property or "titled" property. If they are considered real property under state law you would have to have your mortgage to specifically exclude the MHs as security.

It matters to the customer if their house gets flooded and nobody told them. That was part of the purpose behind the reg, to protect the consumer. What's the big deal about paying $15-$20 for a flood cert?... unless they are in a flood zone and the LO is trying to avoid having the customer pay for flood insurance. If you live in a flood zone, you are more likely to be hit by a flood than by fire.

I don't know where in the "rural southeast" you are, but GA passed a law last year allowing the owner to convert a mobile home to real property and thus be part of the real estate instead of titled. With 3 MHs on 1 parcel it sounds like rental property instead of a private residence so that probably hasn't happend, but I would ask the customer to be safe.

No, the original act passed in 1968 was for everyone's benefit. The government is us - the taxpayers. Lenders need to quit trying to get around the flood rules. It is not in the customer's best interest.

§ 4001. Congressional findings and declaration of purpose
(a) Necessity and reasons for flood insurance program
The Congress finds that (1) from time to time flood disasters have created personal hardships and economic distress which have required unforeseen disaster relief measures and have placed an increasing burden on the Nation's resources; (2) despite the installation of preventive and protective works and the adoption of other public programs designed to reduce losses caused by flood damage, these methods have not been sufficient to protect adequately against growing exposure to future flood losses; (3) as a matter of national policy, a reasonable method of sharing the risk of flood losses is through a program of flood insurance which can complement and encourage preventive and protective measures; and (4) if such a program is initiated and carried out gradually, it can be expanded as knowledge is gained and experience is appraised, thus eventually making flood insurance coverage available on reasonable terms and conditions to persons who have need for such protection.

(b) Participation of Federal Government in flood insurance program carried out by private insurance industry
The Congress also finds that (1) many factors have made it uneconomic for the private insurance industry alone to make flood insurance available to those in need of such protection on reasonable terms and conditions; but (2) a program of flood insurance with large-scale participation of the Federal Government and carried out to the maximum extent practicable by the private insurance industry is feasible and can be initiated.