How do lending institutions determine a loans flood insurance requirement?
The lending institution must determine or have a third party determine if 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 propertys community. If any portion of the improvements 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: (1) Find the correct flood map, (2) Find the general location of the subject property, (3) Find the specific location of the subject propertys improvements on the flood map, and (4) Identify the flood insurance risk zone as shown on the flood map. Learn more about reading a Flood Insurance Rate Map.
