Flood Insurance - Wait Until a Triggering Event?

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Question:

We have loans in the Special Flood Hazard Area that were made prior to our becoming a participating county. Now that we do participate, do we need to require flood insurance or may we wait until one of the triggering events, i.e. renewal, extension, etc?

Answer:

If you Make, Increase, Renew, Extend a covered loan, you must comply with the flood requirements. However, if you have knowledge of uninsured or under insured properties, you also must begin force placement requirements. These are also "tripwires". You can learn more about this on page 53 of the FEMA Guidelines. Since you have knowledge that your loans are secured by improved real estate in a SFHA in a participating community, you must notify the borrowers and require the purchase of insurance.

First published on BankersOnline.com 1/25/10