How do lending institutions determine a loans flood insurance requirement?
The lending institution must determine or have a third party determine whether a building or mobile home (and personal property securing the loan, if applicable) is located within a Special Flood Hazard Area (SFHA) as shown on the effective Flood Insurance Rate Map for the property’s community. If any portion of the structure is located within the SFHA, then flood insurance is required. The steps, as outlined by FEMA, to make the flood zone determination are as follows: • Identify the correct flood map. • Locate the general location of the subject property. • Find the specific location of the structure on the flood map. • Identify the flood insurance risk zone as shown on the flood map.
