Flood Zone Discrepancy

We have a customer with a second mortgage HELOC that we have received conflicting flood zone determinations. Our flood service provider sent us a notice of map change showing that our customer's property was now in zone AE with a notation that the primary residence was in AE and detached structures were in zone X. When the policy was sent over to us it showed zone X. The insurance agent forwarded her determination form all the information(date of change, address, community number, and map numbers) match but it shows that the property is zone X. He also forwarded us the information he received from his first mortgage (for which he owes over the maximum $250,000) since they just notified him that due to a map change he is now in zone X. After providing the agent with the FEMA letter about writing to the most hazardous zone she sent him quotes for zone AE but he is refusing to pay the extra premium. How can I resolve this? Do I send him another 45 day letter stating he does not have the correct coverage and if he does not increase his coverage force place (ours is a private policy) for the amount to cover our second mortgage?

I would ask your vendor to double check and send you map overlays proving they are right. If you get that info, take it to the borrower (or to their agent) and show them the proof. If they won't budge, start force palcement procedures.

Our vendor did provide the map overlays and they are right. A small portion of his house is in the flood zone. The biggest pushback has been that the borrower has received two notifications (the first mortgage and the insurance agency saying no, you don't need it and us saying yes, you do. Do I send a new letter saying you have 45 days to increase your coverage or do I use the original letter and just force place today. His original 45 days has already expired. He sent the policy within the time frame but we have been going back and forth with the borrower and agent.

Also can we just force place for our second mortgage amount or do we need to force place the full first and second mortgage?

Does your determination reference a LOMA/LOMR? I had a similar issue with my vendor and it was determined that the house (from an eagle's eye view) was in a flood zone, but when we looked at the FEMA website there was a foundation survey submitted that had recently been evaluated. The elevation of the foundation took him out of AE and back to X. For some reason the vendor didn't capture this information in their research. When we brought it to their attention, they revised the determination.

I would certainly put in a dispute with your vendor to verify everything.

No, all three do not reference a LOMA/LOMR. They all reference a map revision date. Our vendor's determination does have analyst comments regarding the primary residence in the zone since they completed a map overlay that shows a small portion of the house is in the flood zone AE.

I stole this reply from Randy:

You might want to review Q&A 71 - it does not say you must force place - it says notify the agent and insurance company and document.

If, despite these efforts, the discrepancy is not resolved, or in the course of attempting to resolve a discrepancy, a borrower or an insurance company or its agent is uncooperative in assisting a lender in this attempt, the lender should notify the insurance agent about the insurer’s duty pursuant to FEMA’s letter of April 16, 2008 (W–08021), to write a flood insurance policy that covers the most hazardous flood zone. When providing this notification, the lender should include its zone information and it should also notify the insurance company itself. The lender should substantiate these communications in its loan file.

https://www.bankersonline.com/sites/default/files/tools/flood_faq_2011_10_17.pdf

We sent the letter to the insurance agent and she wrote a quote to the borrower. Now we need the borrower to pay the extra amount to change the coverage from X to AE.

I"m tagging onto this older thread. During an audit we discovered a loan where the determination shows Flood Zone A and the insurance is under Flood Zone X. Apparently (prior to my arrival 6 months ago) the previous compliance officer stated that we couldn't force place and to send a letter to the customer notifying them. This has been going on for two years and nothing has changed. My question is if we can't get the insurance agent to re-write the policy should we be force-placing for the proper zone? My thoughts are that is what we should have done 2 years ago.

See Q&A 71 and 72 if the policy is not grandfathered.

https://www.bankersonline.com/sites/default/files/tools/flood_faq_2011_10_17.pdf

Thanks Randy!