Posted By: Frosh
Flood Insurance Pro-Rata Portion - 09/22/17 05:19 PM
Commercial Loan Officer would like to originate a revolving line of credit where the collateral is secured by the pro-rata portion of 8 one-to-four family residences. One of those residences is in a flood zone.
To calculate the correct flood amount, the Commercial Loan Officer wants the Bank use the "equity amount" of the residence instead of using the original loan amount in additional to the new loan amount for the revolving line of credit to arrive at the correct amount of flood insurance.
Note the Bank has pre-existing liens on all 8 residences.
My question is to calculate the outstanding principal balance, may the Bank use the "equity amount" or must the Bank use the original loan amount?
Thank you in advance.
To calculate the correct flood amount, the Commercial Loan Officer wants the Bank use the "equity amount" of the residence instead of using the original loan amount in additional to the new loan amount for the revolving line of credit to arrive at the correct amount of flood insurance.
Note the Bank has pre-existing liens on all 8 residences.
My question is to calculate the outstanding principal balance, may the Bank use the "equity amount" or must the Bank use the original loan amount?
Thank you in advance.