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New Flood Determination When Renewing/Increasing?

Question: 
Do you need a new flood determination when you are renewing and increasing the loan amount?
Answer: 

by Randy Carey:

68. May a lender rely on a previous determination for a refinancing or assumption of a loan or multiple loans to the same borrower secured by the same property?

Answer: It depends. Section 528 of the Act, 42 U.S.C. 4104b(e), permits a lender to rely on a previous flood determination using the SFHDF when it is increasing, extending, renewing, or purchasing a loan secured by a building or a mobile home. Under the Act, the “making” of a loan is not listed as a permissible event that permits a lender to rely on a previous determination. When the loan involves a refinancing or assumption by the same lender who obtained the original flood determination on the same property, the lender may rely on the previous determination only if the original determination was made not more than seven years before the date of the transaction, the basis for the determination was set forth on the SFHDF, and there were no map revisions or updates affecting the security property since the original determination was made.

Answer: 

by Richard Insley:

In addition to the minimum legal requirement, apply common sense and any knowledge of recent flooding in your area. Maps can be amended at any time and we frequently hear reports of unexpected flooding of places located outside the officially designated floodplain. This is a safety & soundness issue and, if in doubt, it's always safer to require a new designation.

First published on 12/22/2019

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