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#57536 - 01/29/03 02:55 PM
Flood Insurance
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Anonymous
Unregistered
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Situation: Loan is supposed to close on Friday, but the Notice of Special Flood Hazard has not been signed. A "reasonable amount of time" in the act is described as 10 days. The customer is aware that flood insurance will be required, but would the closing date need to be changed to meet the 10 days?
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#57537 - 01/29/03 02:58 PM
Re: Flood Insurance
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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I believe that is so the borrower has sufficient time to obtain insurance. So long as they have a binder at closing, I would not worry about it. Evidently, verbal notice was given since they are aware it's required.
_________________________
My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#57538 - 01/29/03 04:37 PM
Re: Flood Insurance
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10K Club
Joined: Aug 2002
Posts: 47,532
Bloomington, IN
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I agree with Suzy. The 10 days, IMO, is a suggested number of days as being reasonable. I've looked at this way, if you fine out 2 days before the closing (althouh I'd question why you would wait that long to get the FZD) the property is in a SFHA and you tell your customer that they need flood insurance before the loan can close and they are able to obtain the insurance before closing, you gave them a reasonable notice to obtain flood ins. If they say I can't possibly get the insurance within that time, then I would kick in the 10 days.
As for signing the Notice of Special Flood Hazard, as long as you have it documented that it was sent within "the reasonable time", I would get it signed at the closing.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#57539 - 01/29/03 08:36 PM
Re: Flood Insurance
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Gold Star
Joined: Nov 2001
Posts: 447
New England
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If your flood insurance portfolio is otherwise clean, this probably won't be an issue. FDIC wrote us up because they found a few loans where the customer was not given 10 days notice, of course they found issues with a couple other files as well so maybe that influenced their decision.
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#57540 - 01/29/03 10:30 PM
Re: Flood Insurance
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Platinum Poster
Joined: Jul 2002
Posts: 689
Home of the 8 time NCAA Champ ...
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According to the nice notebook I received last March at Compliance School (Thanks David!), the notice must be provided "no later than commitment if the period between commitment and closing is less than 10 days."
Given this, I would think that if the notification was made when the loan was approved (my definition of commitment), that you would be in the clear, but may necessitate an explanatory memo.
Last edited by R.G.Smith; 01/29/03 10:31 PM.
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Kentucky basketball isn't a matter of life and death, it's much more important than that.
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#57543 - 01/30/03 12:36 PM
Re: Flood Insurance
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10K Club
Joined: Sep 2002
Posts: 13,965
TN
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I feel if the bank has had the flood determination for a month stating the property is in a flood zone, that the notice should be provided at least a week prior to the closing. I don't understand why the lending area (lenders and processors) don't immediately forward the document. Of course I was never a lender.
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My Opinions Only
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#57544 - 01/30/03 03:29 PM
Re: Flood Insurance
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Gold Star
Joined: Nov 2001
Posts: 447
New England
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They did reference section 339.9(c) then went on to say "A review revealed four loans where the flood notice was not prvided in a timely manner. Usually ten days prior to the loan closing is considered a reasonable time to provide the notice." Two of the 4 were signed a day or 2 before closing and the other 2 at closing, verbal notice had been given but the signature was obtained when they closed. I've had everyone start sending it certified mail so we have proof they were notified in advance even if they don't sign until closing, but I guess I won't stress if it's not exactly 10 days prior.
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#57545 - 01/30/03 04:37 PM
Re: Flood Insurance
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Anonymous
Unregistered
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YOur "UK" initials caught me by surprise. The last time I say them, they had been burned into a surgical patient's body part prior to removal and had created quite a news story on NBC. Also, a couple of pending lawsuits against the surgeon. You don't go around leaving your mark in the bank, sorta like ZORO do you? (This is all in jest, please don't be upset)
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