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#4362 - 09/06/01 03:25 PM Flood Determinations and Fees
complyguy Offline
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complyguy
Joined: May 2001
Posts: 494
PA
Situation: Bank makes loans for mobile homes located in park. Bank has also made loans to the park itself. Bank obtained flood determination on the park itself, so does not obtain new determination for each mobile home loan. Kirchman's BOB says that "...the lender that makes a covered loan is not allowed to rely on a previous determination. However, when a lender performs subsequent transactions with respect to a property that it already holds as security for an existing loan, any subsequent transaction with respect to that property is treated as a renewal and a new determination is not required." Seems to me both circumstances apply, but they are mutually exclusive. Advice, anyone? Another question, any problem with not charging the flood determination fee to the borrower, even though the determination is performed?

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#4363 - 09/06/01 05:54 PM Re: Flood Determinations and Fees
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Here's an excert from a FDIC FIL dated July 31, 1997. This memo is actually written by the FFIEC, this is just the FDIC's copy of it.

4. Section 528 of the Act permits a lender to rely on a previous determination using the SFHDF when it is increasing, extending, renewing or purchasing a loan secured by a building or a mobile home. The Act omits the ``making'' of a loan as a permissible event to rely on a previous determination. May a lender rely on a previous determination for a refinancing or assumption of a loan?

Answer: It depends. If a subsequent loan involving a refinancing or assumption is made on the same property by the same lender who obtained the original determination, and the other requirements contained in Section 528 are met, the lender may rely on the previous determination. Section 528 of the Act requires that a lender may rely on a previous determination only if the original determination was recorded on the SFHDF within the previous seven years and there were no map revisions or updates affecting the security property since the original determination was made. However, a loan refinancing or assumption made by a lender other than the lender who obtained the original determination would constitute ``making'' a new loan, thereby requiring a new determination.


Therefore, I think that if you already have a determination for the property you do not have to do a new determination. Same property and same lender = no new determination.

If you do not perform a new determination, do not charge the borrower. If you do perform a determination, you can (but you don't have to) charge the borrower.

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David Dickinson
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#4364 - 09/06/01 06:20 PM Re: Flood Determinations and Fees
complyguy Offline
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complyguy
Joined: May 2001
Posts: 494
PA
David,
Thanks, your response supports what I've been able to piece together from other sources. A different concern is that if the mobile home park loan is paid off, the bank must be sure to retain that SFHD form for all the individual loans for mobile homes located in that park, since those individual loans do not have a SFHD form in file.

You know, I was a lender during late 70's/early 80's, and I do compliance 3/4 time now (after a 15-year hiatus from banking). Having just reviewed most of the lending regs sequentially, I honestly don't know if I could do compliant lending without documentation software (the way we did it way back when - documentation by file drawer). There are just too many regs touching on or close to the same issues, but with different rules, exceptions to the rules, and exceptions to the exceptions.

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#4365 - 09/06/01 08:28 PM Re: Flood Determinations and Fees
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I agree. I would photo copy the SFHDF for the MH park and put it with each individual MH loan that I complete.

You are right about the increase in regs. That's why I'm a consultant - those that can't, teach

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David Dickinson
http://www.bankerscompliance.com

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