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Insurance Doc Retention

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  • #2638
    cbg7811
    Participant

    For a refinanced loan, are we required to keep proof that the property was covered by flood insurance for
    the term of the original loan, if we are keeping the same property, etc. on our new loan? Thanks.

    #3020
    rcooper
    Keymaster

    The National Flood Insurance Act of 1968/the Flood Disaster Protection Act of 1973, the flood regulations and the Flood Q&A all refer to record retention requirements for the SFHD and the Notice of Special Flood Hazards disclosure. For these documents the retention requirement is for as long as the lender owns the applicable loan. However, retention of proof of flood insurance is not specifically spelled out. Of course, what is stated in the flood regulations is that: 1) a loan cannot be made, increased, extended or renewed without proper flood insurance in place; and 2) if at any time flood insurance is determined to be inadequate then the lender must initiate the 45 day notification process with the borrower and potentially force place flood insurance if the borrower doesn’t comply. Evidence of insurance, in part, shows compliance with these two requirements and, I would say, should be kept in the file as long as your bank retains loan files per your internal record retention schedule.

    Here are links to a few flood resources:

    https://www.fema.gov/library/viewRecord.do?id=2216

    https://www.gpo.gov/fdsys/browse/collectionCfr.action?collectionCode=CFR&searchPath=Title+12%2FChapter+III%2FSubchapter+B&oldPath=Title+12%2FChapter+III&isCollapsed=true&selectedYearFrom=2012&ycord=456 (See 12CFR339)

    https://www.bankersonline.com/tools/flood_faq_2011_10_17.pdf

    “These are my opinions and they do not constitute legal advice.”

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