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1 property in SFHA secures 3 loans

Home Forums Flood Disaster Protection Act 1 property in SFHA secures 3 loans

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  • #5667
    TheBank
    Participant

    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?

    #5673
    rcooper
    Keymaster

    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

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