Flood

List examples of buildings that are: residential ($250,000), or used for: personal, family or household purposes and are not for AG, commercial, industrial, or other business purpose

- 1-4 dwellings - apartment buildings - condos - Hotels w/ occupancy of 6 mos or MORE - rooming houses with more than 4 roomers - residences with incidental usage of less than 25% of the square footage

For properties located in a SFHA, what info must the notices include:

- FEMA warning that structure is in a flood zone - Flood insurance purchase requirements - flood ins is available - if federal disaster relief is available - policy may be available from private companies - compare policies - escrow requirements -

RCBAP Coverage

- RCBAP policy may only be purchased by the condo owners association - Max coverage is 100% of the RCV or $250,000x the number of units

Non-residential Buildings include ($500,000):

- Small business buildings - churches - schools - farm buildings - pool houses - club houses - recreation structures - mercantile structures - warehouses - industrial buildings - NURSING HOMES - Mixed use buildings with less than 75% residential square footage - hotels with room rentals LESS than 6 mos

Property that can be covered includes:

- all walled and roofed buildings, above ground, and affixed to a permanent site (except gas and liquid storage tanks) - mobile home and trailers affixed to permanent sites - high rise condos with common ownership

What happens if borrower disputes flood ins requirement with FEMA?

- borrower and lender request FEMA to review the determination by using a Letter of Determination Review - borrower submits a scientific or technical info to FEMA - If FEMA agrees, will issue a LOMA - If a COMMUNITY requests that a site is no longer in a flood zone (bc of a grade or site fill) FEMA can issue a LOMR

Define Improved RE

- building > 50% value is above ground - Mobile homes attached to permanent foundations

Other Residential 5+ family dwelling loans coverage amount

- coverage is $500,000

SFHDF - Determination Form - items: - evidences what? - when does it need to be in the loan file? - does is have to be signed? - how long does it need to be retained for?

- evidences that the determination was performed - in the loan file before closing - does NOT need to be signed - retained for the life of the loan

A prior determination can be relied upon if:

- not more than 7 years old - previous was on the standard form - flood zone has not changed

Notice of special flood hazards - when is it provided? - what language must it include? - does it have to be signed? - when should it be provided?

- provided when the borrower MUST obtain flood insurance bc the property is located in a flood zone - escrow language - MUST be signed -provided reasonable time (10 days) before closing

List exemptions to the Flood Reg

1. loans with original principal balance of $5,000 or less AND the repayment term is 1 year or less 2. State-owned property covered under a self-insurance policy approved by FEMA 3. Detached structures that are not a residence

What is included as a designated loan (5)?

1. table funded loans 2. abundance of caution collateral 3. HELOCs 4. Secondary Mortgages 5. Improved RE

Flood - What does it cover, and what is it triggered by?

Any loan SECURED by improved RE or an insurable mobile home Triggered by the collateral, not by the purpose

Flood/Reg Z and Finance charges - Are the determination fees and the life of loan fees finance charges?

Determination fee is not a FC LOL IS a FC

How is flood insurance handled for lines of credit?

Flood determination is pulled at the time of acct opening. Draws do not trigger the requirement to pull a new flood determination

Which triggering events require a SFHDF to be pulled?

M = Make I = Increase R = Renew E = Extend

Does a bank have to purchase flood insurance for a loan where the community does not participate in the NDIP?

No, if the community does not participate in the NFIP, then flood insurance is not required to be purchased.

What about gov't guaranteed loans? Can a bank originated a gov't guaranteed loan in a flood area?

Yes, but only if the gov't guaranteed collateral is located in a community that participates in the NFIP.

Does a loan purchase or participation trigger flood requirements?

a loan is purchase or participation does not trigger flood requirements. If funds are pooled and simultaneously advanced then flood requirement DO apply

State National Bank is making a loan to the ACME Corporation to be secured by ACME's manufacturing plant. The bank's loan is for $250,000. The appraised value of the plant is $750,000. The maximum amount of flood insurance available for a commercial building is $500,000. What is the least amount of flood insurance the bank must require under the Flood Regulations? a. $250,000 b. $750,000 c. $500,000 d. None of the above

a. $250,000

Which of the following is acceptable proof of the purchase of flood hazard insurance? a. Copy of the declarations page of the insurance policy b. A certificate of insurance c. Flood insurance binder d. Letter signed by the borrower agreeing to purchase the insurance

a. Copy of the declarations page of the insurance policy

Flood insurance lapsed on a loan at First Bank on June 1. The bank sent the borrower a notice stating that flood insurance was required and giving the borrower 45 days (until July 15) to reinstate the policy or purchase a new one. If the borrower does not reinstate the flood insurance and the bank force places a policy and charges the borrower for the premium, what date should the force placed policy start coverage? a. June 1 b. June 30 c. July 1 d. July 15

a. June 1

Which of the following loans requires a notice of special flood hazard? Loan A is to be secured by a car-wash facility located in a special flood hazard area in a community where federal flood insurance is not available Loan B is to be secured by a rental house not located in a special flood hazard area but in a community where flood insurance is available Loan C is to be secured by a vacant lot located in a special flood hazard area in a community where federal flood insurance is available a. Loan A b. Loan B c. Loan C d. All the loans

a. Loan A

Which of the following loans does NOT require flood insurance? Loan A is a commercial loan that has been on the books for two years and has been renewed twice. Flood insurance was legally required on the loan at the time it was made. There was a flood insurance policy in effect at the loan's inception, but it expired and was not renewed. Loan B is a consumer loan secured by a mobile home that is located in a flood hazard area in which federal flood insurance is not available. Loan C is a commercial loan that the bank would be willing to make on an unsecured basis, but the borrower has offered some commercial real estate property as collateral. The property has one vacant building on it, and it is in a flood hazard area in a community where federal flood insurance is available. a. Loan A b. Loan B c. Loan C d. None of the loans

b. Loan B

The compliance officer gets a call from the head of the Mortgage Department who informs the compliance officer that they are planning to make a second lien mortgage loan on a residence. The property is located in a Special Flood Hazard Area requiring flood insurance but the customer is objecting to getting flood insurance. The customer says that the first lienholder never required it, so why is our bank requiring it. The compliance officer should tell the Mortgage Department head... a. If the first lienholder didn't require the flood insurance, we, as second lienholder, don't have to either b. We do need to require the borrower to obtain flood insurance that fully covers the property including the first lien loan balance c. We do need to require the borrower to obtain flood insurance that covers our second lien loan amount d. We cannot make the loan because the first lienholder did not properly require flood insurance

b. We do need to require the borrower to obtain flood insurance that fully covers the property including the first lien loan balance

Assume that the properties involved in the following loans are located in special flood hazard areas. Which loans would NOT require flood insurance as a condition of the loan? a. A mortgage loan made to a consumer secured by a residence in a community in which flood insurance is available b. A commercial loan secured by residential real estate located in a community in which flood insurance is available c. A consumer loan secured by a lake house located in a community in which flood insurance is not available d. A loan for the purpose of making investments secured by commercial rental property located in a community in which flood insurance is available

c. A consumer loan secured by a lake house located in a community in which flood insurance is not available

When is the purchase of flood insurance required on or before loan closing? a. Construction mortgage loan is to be secured by a single family dwelling in a participating community b. Conventional mortgage loan is to be secured by an attached mobile home in a special flood hazard area of a nonparticipating community c. Conventional mortgage loan is to be secured by a vacant lot located in a special flood hazard area of a participating community d. Business mortgage loan is to be secured by a commercial building located in a special flood hazard area of a participating community

d. Business mortgage loan is to be secured by a commercial building located in a special flood hazard area of a participating community

When does a notice that the borrower's property is located in a special flood hazard area have to be given to the borrower? a. Before making a commitment to lend b. Within 10 days after closing c. At the time of the application d. Within a reasonable time before completion of the transaction, but no later than the bank sends other notices concerning insurance or taxes

d. Within a reasonable time before completion of the transaction, but no later than the bank sends other notices concerning insurance or taxes