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#75684 - 04/24/03 07:26 PM Flood: LOL vs New Vendor
complyguy Offline
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complyguy
Joined: May 2001
Posts: 494
PA
Borrower had a loan whose LOL coverage was underwritten by one vendor. Bank changed vendors. Lender refinances old loan, but uses old (vendor's) flood certification as documentation.

My fear is that the previous vendor's LOL will not extend to the new loan. The lender argues that the property was previously determined not to lie in a flood zone, using the form that was current at that time, so there's no problem.

Opinions?

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Lending Compliance
#75685 - 04/24/03 07:36 PM Re: Flood: LOL vs New Vendor
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 80,363
Galveston, TX
Tell your lender to stick with lending and you'll handle the compliance. Ask him how will he know when the maps are redrawn and the property falls within a flood zone three years from now?
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#75686 - 04/24/03 08:13 PM Re: Flood: LOL vs New Vendor
complyguy Offline
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complyguy
Joined: May 2001
Posts: 494
PA
I did ask him, and his response was "Well, if it wasn't in a flood zone the last time, what are the chances the maps will change?" I told him I didn't think the examiners would be impressed with his oddsmaking.

Here, compliance is definitely the cart, not the horse.

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#75687 - 04/24/03 09:57 PM Re: Flood: LOL vs New Vendor
D2Xs Offline
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D2Xs
Joined: Jan 2002
Posts: 2,706
Your lender needs to get a wake up call. A nice fine against his/her commission for the violation would do it. The lender is taking a big chance. According to our OCC examiner, flood is one of the most violated regulations for 2002.
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#75688 - 04/25/03 01:39 PM Re: Flood: LOL vs New Vendor
complyguy Offline
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complyguy
Joined: May 2001
Posts: 494
PA
Thanks for the support, folks! I just wanted to check to make sure I'm not missing something whereby the bank would be on solid footing with respect to this loan.

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#75689 - 04/25/03 01:52 PM Re: Flood: LOL vs New Vendor
swiggles Offline
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swiggles
Joined: Aug 2001
Posts: 7,333
Quote:

Tell your lender to stick with lending and you'll handle the compliance.




Yeah, right.............
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The more you sweat in training, the less you bleed in battle.......

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