Two Flood Certifications/Determinations Needed?

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Question:

I have two loans, one revolving line of credit with a one year maturity and one term/balloon with a twenty year term. The real estate for both loans is being cross collateralized. Don't we need a separate flood certification/determination for each loan?

Answer:

No. You need a determination of the property and this can be accomplished with one SFHDF. The August 29, 1996, Federal Registe provided the following in the release of the final rules (emphasis added):

"Two commenters pointed out that pursuant to section 1365 of the 1968 Act, a lender cannot rely on a previous determination set forth on a SFHD form when it makes a loan, only when it increases, extends, renews or purchases a loan. The agencies agree with this interpretation of section 1365 of the 1968 Act but note that >b>subsequent transactions by the same lender with respect to the same property will be treated as renewals and will require no new determination."

This is also addressed on page 33 of the Mandatory Purchase of Flood Insurance Guidelines (http://www.fema.gov/pdf/nfip/mandpur1.pdf), dated September 1999: "If a borrower obtains a home equity or second mortgage from its first mortgagee that is secured by a secondary lien position, and provides evidence that adequate flood insurance coverage is in place for all loans, the lender can rely upon the original SFHDF if no remapping has occurred."

First published on BankersOnline.com 2/19/07