What loan amount should we use to compare to the replacement cost value when determining the minimum required flood insurance amount when one property secures 3 different loans? The first loan was only for $68,000 and the replacement cost was higher, so our minimum required at the time was only the $68,000.
Now we have made 2 more loans also secured by this same property as well as other properties that are not in SFHAs. Do I add all 3 loans together and compare that figure to the replacement cost of the property?
Yes, you’re correct. You would use the same formula to determine the amount of flood insurance required as you would with a single loan but take into account the outstanding balance of all loans.
The lesser of:
The outstanding principal balance;
The value of the property minus the land/ RCV;
The maximum available through the NFIP