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Flood Insurance for Condo Under FNMA PERS Approval

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Question: 
Question on Flood Insurance Requirement for a Condo with over 25% commercial space and under FNMA 1028 PERS approval:If a Condo project has over 25% commercial space, the condo will be consider as a Commercial Condo or Non-residential Condo, as per FEMA, and the said Condo is no longer qualified under the basic RCBAP coverage which I understand.Here is a condo in NYC and Lender stated the Flood Insurance is not sufficient and borrower must obtain their own Flood Coverage via NFIP.The condo has:<ol><li>Standard NFIP $500,000.00 Max Commercial Policy with $5,000.00 deductible;<li>Excess Flood Policy $160,000,000.00;<li>The Project has 453 Units and $250,000.00 min Flood Policy needed which is min Flood Requirement of $113,250,000.00;<li>Since Standard NFIP Max Coverage is $500,000.00 for Commercial or Non-Residential Condo, the Condo purchased additional $160,000,000.00 under Excess Flood Policy.</ol>Is the Flood Insurance of $500K with NFIP w/ $5k deductible + Excess Policy of $160 million enough and sufficient to fulfill the FEMA and FNMA Requirement or does the individual have to obtain their own flood via NFIP of max $250K?
Answer: 

Lender stated the Flood Insurance is not sufficient and borrower must obtain their own Flood Coverage via NFIP.

They can't. The maximum coverage available, $500,000, through the NFIP has already been obtained for the property type. This coverage meets the minimum required coverage under the Act. Any excess coverage is through a private policy, not an NFIP policy.

First published on BankersOnline.com 6/17/13

First published on 06/17/2013

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