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Flood – Amount of coverage

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  • #2512
    madunn
    Member

    when determining the flood coverage do you use the total note amount which could include fees or do you use just the prinicpal amount given to the customer?

    Thanks

    #2945
    jholzknecht
    Keymaster

    You should use the actual amount of the loan, which includes any fees that are financed.

    #3111
    TheBank
    Participant

    What about when you have a large loan secured by several properties, how does that affect the amount you use for “the amount of the loan”? Right now I have a $322,000 loan secured by 6 duplexes, 4 of which are in special flood hazard areas requiring flood insurance. How much of the loan do I allocate to each of the 4 in the flood zone in this example for purposes of determining the lesser of the loan amount or max available?

    #3113
    dmurray
    Participant

    In your case were the 6 duplexes appraised separately? Or in the appraisal is there a breakdown of value per duplex that was determined on a cost-value? If so, I’d take the value of the 4 that are in the flood zone and determine the amount of insurance required by that.

    #3115
    TheBank
    Participant

    So you would take the total RCV of the 4 in SFHA and compare to the total loan amount?

    #3116
    dmurray
    Participant

    You need the lesser of the 3:
    – Outstanding balance (Loan amount)
    – Insuranble value (RCV is acceptable)
    – Max available through NFIP.

    So to answer your question, yes. If you have these specifically broken down in an appraisal, I wouldn’t bat an eye at using the RCV per dwelling. PM if necessary.

    **by “per dwelling”, I mean the total of the RCV per dwelling in an SFHA.

    #3117
    TheBank
    Participant

    I guess what I was getting at, was you wouldn’t lower the loan amount due to some of the collateral, 2 properties, not being in SFHAs? I would still factor in the TOTAL loan amount?

    #3118
    dmurray
    Participant

    No.

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