Posted By: ynot
Notice Provisions - 06/13/13 03:33 PM
I was at a seminar this week and the statement below is in the materials, not quite sure I understand it.
"When a bank makes, increases, extends, or renews a loan secured by a building or a mobile home and any personal property located or to be located in a special flood hazard area:
The bank shall mail or deliver a written notice to the borrower and to the servicer in all cases whether or not flood insurance is available under the Act for the collateral securing the loan."
Scenario #1: Property is partially in a SFHA, the structures on the property are not in the SFHA, is the notice required?
Scenario #2: Property is partially in a SFHA, there is a structure in the SFHA, however the structure is a pole barn which has a roof but no walls, it is not an eligible building. Is the notice required?
When I read the information from the seminar I take it as the notice will be sent regardless of whether the structure is required to have flood insurance or not.
Wouldn't this confuse the customer since the notice states: "We will not make you the loan that you have applied for if you do not purchase flood insurance. If you fail to renew flood insurance on the property, federal law authorizes and requires us to purchase the flood insurance for you at your expense. The flood insurance must be maintained for the life of your loan."
"When a bank makes, increases, extends, or renews a loan secured by a building or a mobile home and any personal property located or to be located in a special flood hazard area:
The bank shall mail or deliver a written notice to the borrower and to the servicer in all cases whether or not flood insurance is available under the Act for the collateral securing the loan."
Scenario #1: Property is partially in a SFHA, the structures on the property are not in the SFHA, is the notice required?
Scenario #2: Property is partially in a SFHA, there is a structure in the SFHA, however the structure is a pole barn which has a roof but no walls, it is not an eligible building. Is the notice required?
When I read the information from the seminar I take it as the notice will be sent regardless of whether the structure is required to have flood insurance or not.
Wouldn't this confuse the customer since the notice states: "We will not make you the loan that you have applied for if you do not purchase flood insurance. If you fail to renew flood insurance on the property, federal law authorizes and requires us to purchase the flood insurance for you at your expense. The flood insurance must be maintained for the life of your loan."