Answer:
Flood Insurance requirements apply if you have a "covered loan". If you'll look at the definition of that term in the regulation, you'll find the rules don't apply to a bare lot. If the loan will build the new dwelling, then it would be applicable. I assume (but don't want to) your loan is not building the new house since it is 2-3 years away. If your borrowers come back to you for the construction financing, then you'd have a "covered loan".
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