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?

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?

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.

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.

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.