How Many Days to Close for New Flood Determination

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Question:

We are refinancing a real estate secured loan in house with a new loan (adding money) that is in a flood zone. Per our bank policy, we ordered a new flood determination. There is already flood insurance in place. Do we need to wait 10 days to close from the date the borrower signs the flood notice?

Answer:

The regulations say you have to provide the notice within a reasonable amount of time before closing and they futher say that 10 days is presumed to be reasonable. But they also say that if there are less than 10 days between the date of commitment to make the loan and the closing, providing the notice by the commitment date is reasonable. Given that the borrower already has flood insurance in place (I'm assuming in a sufficient amount for your loan), I think you can make the case that providing the notice at any point ahead of the closing could be defended as being reasonable.

First published on BankersOnline.com 9/24/12