Flood & Bank Owned Property

Posted By: HR Banker

Flood & Bank Owned Property - 08/13/15 04:02 PM

Just verifying that a property in the flood zone must have flood insurance maintained on it even though the bank is the owner due to foreclosure.
Posted By: Ski

Re: Flood & Bank Owned Property - 08/13/15 04:19 PM

From the now defunct "Mandatory Purchase of Flood Insurance Guidelines":

Lender Responsibilities:

The statutory requirements apply when improved real property (that is, a building) or manufactured (mobile) home is taken as security for a loan.

Is there a loan? You stated the Bank owns the property now due to foreclosure. If the property in the SFHA is now OREO, it is a bank asset, so your obligation to have flood insurance comes from a safety and soundness perspective, not compliance.

Just sayin'.
Posted By: Dan Persfull

Re: Flood & Bank Owned Property - 08/13/15 05:40 PM

I agree. The bank is not required to maintain flood insurance on OREO property, although from a S&S perspective it would be advisable.