Flood insurance and mortage companies

[always_learning]

Does anyone know if a mortgage lender (in the US) can require flood insurance at a date after the initial loan date?

For instance, no flood insurance is required at the time of closing and then, say, three years down the line, FEMA designates said property as being in a flood zone. Can the mortgage company then come and say 'hey, you must get this insurance now" or are they bound by the initial loan terms?

(I'm not debating on whether the owners should voluntarily buy it or not, but am just curious as to the mortgage company's rights and limitations.)

Thanks in advance.

 

[MissMolly]

Yes. If they are a federally regulated mortgage company ( and almost all are ) then they are required under federal law to ensure that your property is properly insured for flood once FEMA determines it is in a high risk area, even after closing. FEMA maps are constantly changing - sometimes to the homeowners' benefit, sometimes not. But your lender has no choice in the matter.

 

[Ginny]

I am in that exact situation in South Carolina. Because I am on the river, I chose to purchase FEMA flood insurance from our initial purchase 2 years ago. Flood map changed, my home is partially in the flood plain ( lower garage only.) and then I refinanced. New mortgage company upon refinancing did not require flood ins. It costs only about $500.00. We did not use it for Florence.

 

[Ronstar]

Even if FEMA shows a property in a special flood hazard area, it’s possible to the remove the property from a flood hazard area if a survey is prepared that finds the house above the base flood elevation, and a Letter of Map Amendment (LOMA) is filed and approved by FEMA.

 

[always_learning]

Fantastic. Thanks everyone!

We're looking at a property where part of the land is in Zone A but the structure (condo) is in Zone X and are trying to figure out what's going on.

The mortgage co insists that the property is in a high risk zone, but the elevation is 5 ft above the BFE so we're asking for the insurance requirement to be removed and were just wondering if this would become a yearly fight. We are trying to decide if it's worth fighting for or if we should just look elsewhere.


If we decide to move forward because the mortgage company does remove the requirement, we would get it anyway, but if they require it, it could hurt resale down the road as no other houses on the street need it. That's why we're on the fence about it.

 

[MissMolly]

If your home is truly 5 ft above the BFE, then you can get a surveyor to perform an elevation certificate on your home. Once you have that you can submit a Letter of Map Amendment to FEMA. FEMA will review everything and if they determine your home is above the BFE they will issue an official Letter of Map Amendment which you can then present to your lender and hopefully get the insurance requirement waived. However, be aware that some mortgage documents contain language which gives the lender the right to demand continuing flood coverage. If your mortgage contains that language and your signed the mortgage then you agreed to that condition. Once you have the letter of Map Amendment it would be official and not something you would have to go through each year.

 

[Ronstar]

Fantastic. Thanks everyone!

We're looking at a property where part of the land is in Zone A but the structure (condo) is in Zone X and are trying to figure out what's going on.

The mortgage co insists that the property is in a high risk zone, but the elevation is 5 ft above the BFE so we're asking for the insurance requirement to be removed and were just wondering if this would become a yearly fight. We are trying to decide if it's worth fighting for or if we should just look elsewhere.


If we decide to move forward because the mortgage company does remove the requirement, we would get it anyway, but if they require it, it could hurt resale down the road as no other houses on the street need it. That's why we're on the fence about it.

Should be easy to convince the lender that the building is in zone x. Have a surveyor make a plat showing the flood plain areas in relation to the building. If the condo is indeed in zone x, have the survey plat contain a signature block that states that the condo at address xxx lies within zone x. Maybe have the surveyor explain it to the lender.