We have loan that is secured by a property located in flood zone due to a map change in September 2011 before the Q&As came out where you could no longer us appraised value minus land. The customer did not get insurnace after he was notified but is now attempting to get flood insurance.

Since this happened before the new difinitions came out of how to calculate insurance would we still be able to use that approach of appraised value minus land?

please help!

I want to make sure I understand the situation. The map changed in September 2011 and the property is now in a SFHA, you calculated required coverage (based on appraised value minus land), and then notified the customer, correct? Is there force placed insurance in place since they didn't get their own? If the customer is just getting their own insurance and there hasn't been a MIRE event, I would use the value you originally calculated.

Yes the map changed in September 2011 and we calculated based on appraisaed value minus land and notified customer. We do have force placed insurance since they did not get their own.

What if they are wanting to modify the loan now? Should we now calculate based on replacement cost or cost approach on the appraisal?

Yes, use RCV if it's their primary residence and ACV for all other structures.

Just a note: Appraised value minus land was never an acceptable value.