We have a loan in the pipeline and received notice that the building is in a special flood zone area. The building is a multiple unit apartment building consisting of a basement and 4 floors. There was an elevation certificate done which showed that only the basement is in the flood area. There is nothing in the basement, and no contents stored there.
I realize that in determining the minimum required flood insurance we have to take into consideration:
1-Replacement cost of the building / appraised value;
2- MAX limits of coverage: $500,000.00 limit for structure / $500,000 for contents (since this is a multiple unit apartment building), and the
3- loan amount.
Our question is, once we assign a value, and because the flood area is only in the basement, as determined by the elevation certificate, since the building is 4 floors and a basement, can use 1/5 of the value as a factor in determining minimum required flood insurance?
Can a third-party conduct the policy review?
It is my understanding that we must accept private flood insurance only if it contains the Compliance Aid statement. Correct?
If a non-FEMA policy does not meet the definition of "private flood insurance" can it still be accepted?
Is use of the new rules mandatory?
Is a loan secured by a note receivable, which is subsequently secured by real estate with structures on it a designated loan for FDPA? We have had some debate about the fact that the banks collateral assignment has been recorded in the real property records which puts us in the chain of title and therefore the loan should be designated.
And is it a flood violation if the borrower has proof of flood insurance but the bank is not listed as loss payee?
When are the new rules for private flood insurance effective?
We are preparing a 3 month deferral of payments ONLY not extending maturity. The property is in a special flood zone. Is it a requirement to pull a new flood determination?
A local swim club has applied for a $25,000 loan to do improvements. The flood search shows that the security property (which is one parcel) is in a flood zone. Per the insurance company that insures the swim club, the pump house is not in a flood zone. Using the flood maps, the township engineer says that he will issue an elevation certificate and a letter certifying that the clubhouse on the security property is also not in the flood zone. The pool itself cannot be covered by a flood policy. If our bank gets an elevation certificate and a letter from the township engineer, is this sufficient to warrant our bank putting this loan on without flood insurance?
Should Lenders receive a declaration page or receipt of coverage from their customer's insurance agent to certify Flood Insurance has been purchased prior to closing? And is this a requirement that has to be received before a home loan can close?