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Loan w/o Flood Insurance- Elevation Certificate

Answered by: 
Randy Carey
David A. Dickinson

Question: 
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?
Answer: 

by Randy Carey:

Elevation of a building has nothing to do with whether the building is in or not in a SFHA. All buildings in a SFHA area have to be built with their base floor above the BFE. That doesn't mean they are out of the zone unless they are outside of the SFHA boundary. They would need a LOMA.

Answer: 

by David Dickinson:

Randy is correct. Let me add:
If the flood map shows the property is in a SFHA, you'll need a Letter of Map Amendment (as Randy stated). Only FEMA can issue a LOMA. The elevation certificate and supporting documents that you mention will help with this process, but the township engineer cannot make this determination for you. Again, only FEMA can make this call.

First published on 01/13/2019

Filed under: 
Lending
Filed under lending as: 
Flood
Real Estate Lending

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