If flood determination is completed after closing (property NOT in flood zone.) Is this really & truly a violation. (Previous determination was also in file, but it was older than 7 years.)

Lender Responsibilities (pages 5-6) in mandatory purchase guidelines doesn't specify that the determination must be done prior to closing.

In real life, I agree that it should be. Going thru an exam right now, and trying to persuade examiner that because not in a flood zone no violation exists.

Can anyone else support this position?

I cannot support your position. If it had been in a SFHA, the notice would have been required so it's only logical the SFHDF must be conducted prior to closing.

Same page 5, section:

d. Insurance Required at Loan Closing

A designated loan must have flood insurance as a condition of closing. If a borrower will not voluntarily obtain coverage, the lender must deny the loan. A lender cannot accepta borrower's assurance that he or she will obtain coverage in the future or grant the lender immunity while he or she seeks coverage. Closing a designated loan without coverage in place constitutes a violation of the regulation.


So if the lender is not going to determine this prior to closing, how do you propose that this item be fulfilled? Without pulling a determination, how do you know if you can pull it before or after closing?

Face it, you got yourself a violation.

I'm really playing devil's advocate here (you know trying to get out of a violation)........

Remember this loan was not in flood zone and we had a pretty good idea that it was not (based on previous determination). Additionally, we subscribe to life of loan coverage.

Granted if it had been in a flood zone we would have been SOL, but because it wasn't no notice or insurance was required.

We meet the requirement to determine if the property was in flood zone using the SFHD form.

I'll be the first to agree that we SHOULD have completed update flood determination prior to loan closing, but we didn't. (That is our usual practice.)

Likely, if it's an isolated occurrence you will only be cited on a technical...suck it up...it's just wrong! I don't see worming your way out of it.

I think you would be better served to simply acknowledge you have an error in practice, agree to fix it so it doesn't happen again, and stop arguing with your examimers.

A this point you are simply wasting their time and potentially diminishing your credibility with them... they are not interested in playing games with you.

Hold up guys!!!
I'm not at all arguing with my examiners. I know better than that. Just trying to look at all possible angles on this one.

There's no way out of this one. You inappropriately relied on an outdated determination, therefore you did not make a proper determination before the loan was made. The fact the property was not in a SFHA does not negate that fact.

From page 34 of the MPFIG:

A lender also must complete the SFHDF (see Appendix 3, Standard Flood Hazard Determination Form) prior to concluding loan processing.

I am convinced!
Thanks for the comments.