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#2217185 - 07/08/19 09:13 PM Multiple Properties
Luvinit Offline
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Joined: Dec 2009
Posts: 173
We are securing a loan with 12 rental properties, 2 of which are in SFHA. In determining the amount of flood insurance coverage, I know that it is the lesser of:
1) Loan Amount ($1,000,000);
2) Maximum Insurable under FEMA ($250,000);
3) ACV/RCV value ($135,000 - amount on just one of the properties)
I would say that we are required to have at least $135K in flood insurance coverage on this particular property. The property only carries $110K in coverage. Our compliance officer is approving the use of the release price of the property which is $60K as our flood insurance minimum requirement. He comes up with the release price by taking the value arrived at by our internal evaluation, $80K X .75 = $60K.
Have I missed something recently where we can use an amount other than the loan amount as one of the three tests?

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Flood Compliance
#2217186 - 07/08/19 09:34 PM Re: Multiple Properties Luvinit
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Your compliance officer is wrong.

The minimum insurance is likely to be the full ACV of both properties individually that are in the SFHA.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2217187 - 07/08/19 09:40 PM Re: Multiple Properties Luvinit
Luvinit Offline
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Joined: Dec 2009
Posts: 173
Thank you for the confirmation and quick response...much appreciated!

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#2217217 - 07/09/19 03:13 PM Re: Multiple Properties Luvinit
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Luvinit: I want to clarify something. You said in your first post
2) Max Insurable under FEMA (250,000). That's 250k PER BUILDING.

You also said the insurable value was $135k but said that was just one of the the properties. What's the value of the other property that is located in the SFHA? You need to put all of properties that are in a SFHA "on the table" and remove all of the properties that are not in a SHFA. Then evaluate to determine the "lesser of" amount.

You're going to need $135k on the 1st rental and you'll need the insurable value or FEMA max on the 2nd rental.
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David Dickinson
http://www.bankerscompliance.com

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#2217238 - 07/09/19 04:09 PM Re: Multiple Properties Luvinit
Luvinit Offline
100 Club
Joined: Dec 2009
Posts: 173
David: I'm glad you could read between the lines! Yes, that example was based on just one property and I would do the same calculation on the 2nd rental property. Unfortunately, I can't get the CO to change his mind so I guess I'll just have to document the issue.

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#2217254 - 07/09/19 05:00 PM Re: Multiple Properties Luvinit
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Why don't they subtract the land value from the loan amount too??? smile
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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