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#897558 - 01/31/08 07:43 PM Flood Determination on a Renewal
ComplyOhMy Offline
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Joined: Dec 2005
Posts: 514
Lexington, Kentucky
Do you need to get a Flood Determination on a renewal? The original loan was in 2001. Another problem is there was a Flood Zone Determination in the renewal loan file but it was 7 days after the loan was closed. The loan officer is saying he didn't have to have the determination anyway and just did it for extra coverage so he should not be written up for a violation. I say that is wrong. Can anyone help with this one????

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Lending Compliance
#897579 - 01/31/08 07:54 PM Re: Flood Determination on a Renewal ComplyOhMy
M Cockrell Offline
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M Cockrell
Joined: Jan 2003
Posts: 1,033
Dallas, TX
from pgs 51-52 of the "FEMA Flood Book":

"A previous determination may not be reused when making a new loan. If the loan is not new, i.e., if the transaction pertains to increasing, extending, renewing, or purchasing an existing loan, the determination can be reused if:


[*]It is less than 7 years old; and
[*]No new or revised FIRM or FHBM has been issued in the interim; and
[*]It was initially recorded on the SFHDF.

If a borrower obtains a home equity or second mortgage from its first mortgagee that is secured by a secondary lien position, and provides evidence that adequate flood insurance coverage is in place for all loans, the lender can rely upon the original SFHDF if no remapping has occurred."

So, the questions that should be answered are:

I. Is this a "new" loan?
A. If "Yes," is it a subordinate lien where you also hold the 1st?
1. If "Yes," then you MAY rely upon the existing determination, provided ALL 3 of the criteria above are met.
2. If "No," then you may NOT rely upon the existing determination; a NEW determination will be required.
B. If "No," then it should be an increase, an extension, renewal, or a refinance, and you MAY rely upon the existing determination.
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#897621 - 01/31/08 08:12 PM Re: Flood Determination on a Renewal M Cockrell
Dan Persfull Offline
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Dan Persfull
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Posts: 46,832
Bloomington, IN
http://www.fca.gov/preambles_historical....b5?OpenDocument


Two commentors pointed out that pursuant to section 1365 of the 1968 Act, a lender cannot rely on a previous determination set forth on a SFHD form when it makes a loan, only when it increases, extends, renews or purchases a loan. The agencies agree with this interpretation of section 1365 of the 1968 Act but note that subsequent transactions by the same lender with respect to the same property will be [*45698] treated as renewals and will require no new determination.


Same Property + Same Lender = same SFHD as long as it is on the SFHDF, less than 7 years old and there have been no map changes.


However, you may have a contractual issue with your vendor.
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#897627 - 01/31/08 08:14 PM Re: Flood Determination on a Renewal M Cockrell
RR Joker Offline
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The Swamp
A renewal of a loan that was originally made in 01. That is approaching the 7-year limit. I would have pulled a new determination. It would have been best to have pulled it prior to closing, however. If it was in a FZ, you would have been required to give Notice to the borrower regardless.
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#897674 - 01/31/08 08:49 PM Re: Flood Determination on a Renewal RR Joker
ComplyOhMy Offline
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Joined: Dec 2005
Posts: 514
Lexington, Kentucky
Does it change anything that no new mortgage was taken? No new money. This was renewed b/c the customer lost their home equity checks.

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#897678 - 01/31/08 08:55 PM Re: Flood Determination on a Renewal ComplyOhMy
RR Joker Offline
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RR Joker
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The Swamp
Interesting...so this was a safety/security procedure. Did it retain the same original maturity, or was it "extended"? Again, the FD is good for 7 years/same lender/same property. My only concern was that you were near the 7-year mark based on your origination. I believe that if you kept the original maturity...you are fine. Regardless, if you are technically under the 7 years...you are still okay. If the original loan closed in 11/01, for instance, and has renewed 1-29-08, you are technically under 7 years.

I know at my FI...most of our lenders (boy I just gave too much credit! ) would have gone ahead and covered it, as a precaution, such as your lender did. If the 7 years ended 1-5-08, I would have wanted it pulled prior to closing for sure tho.
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#1436608 - 08/30/10 09:37 PM Re: Flood Determination on a Renewal RR Joker
rsanders Offline
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Joined: Feb 2010
Posts: 72
When it comes to the discussion of flood what is considered a renewal? For example, we may do a 5 year balloon loan with a house or commercial building as collateral. When the loan matures and we renew the loan we get a new note signed and everything. Would that be considered a renewal or a new loan? Would we need to get a new determination or could we rely on the old one?

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#1436618 - 08/30/10 09:49 PM Re: Flood Determination on a Renewal Dan Persfull
Way Out West Offline
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Way Out West
Joined: Jun 2001
Posts: 246
San Francisco
Originally Posted By: Dan Persfull
Same Property + Same Lender = same SFHD as long as it is on the SFHDF, less than 7 years old and there have been no map changes.


What Dan said two years ago still applies. I would only modify it to say Same Property + Same Borrower + Same Lender = Same SFHD. Whether or not you get a new note signed (that's typical in commercial transactions) is irrelevant as long as you've got Same/Same/Same.
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#1436697 - 08/31/10 12:47 PM Re: Flood Determination on a Renewal Way Out West
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,832
Bloomington, IN
Quote:
I would only modify it to say Same Property + Same Borrower + Same Lender = Same SFHD.


I don't disagree from a practical and best practice standpoint but technically it doesn't have to be the same borrower.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1436707 - 08/31/10 01:06 PM Re: Flood Determination on a Renewal Dan Persfull
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Posts: 21,281
I agree with Dan. It has never been a requirement that the borrower be the same. The focus is on the property and its location.
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