The FDPA states that the borrower must be notified that they are in a special flood hazard area not later than 10 days before closing the transaction. I recently found out that we usually don't pull the flood determination until later in the loan origination procedure, not always allowing a 10 day period. Do we have to wait 10 days from the date the determination is made to disburse or close a loan? What about 2nd liens or modifications that have a shorter origination window? Are we going to get dinged for loans that aren't in a flood zone if there is no 10 day period?

The 10 days is now a recommendation, not a requirement. That being said, consistently doing the determination early in the process is best. When I audited banks, I recommended that it be obtained concurrently with the request for value (ordering of the appraisal) OR concurrently with the title search.

Using the "no harm, no foul" system works fine when required insurance can obtained without delaying the loan, but the first time loan closing must be delayed will leave you, at best, with an unhappy borrower. At worst, there may be financial repercussions with the delay.

Also, residential appraisals do not always assign values separately to detached garages, cabanas, etc. You must have a separate policy on each insurable structure. Going back to the appraiser for a revised value may cost something.

Al

And, we have been critized at exam time for not ordering the flood determination in a timely manner. The argument has been that we knew we needed the flood determination when we ordered the appraisal and/or title commitment/search. The cost of the flood determination is nominal and our lending staff is now required to order the flood at the same time the appraisal etc is ordered. It's a simple solution and in my opinion not worth the hassle to do otherwise.

A little different topic, but if I find that we failed to give the notice to the customer on a loan from back in 05, should I have the lender get that now to have in the file, or skip it at this point. We have the determination, they just didn't sign the notice.

Any thoughts!

Skip it and get a check ready for the regulators for $385

I order a flood search as soon as I recieve a signed Commitment Letter.