Did a LOMA for a client removing the structure from a Zone A. No issues went through as usual. We've done dozens in last few years. She called this morning in a snit. It seems her lender will not remove the flood insurance requirement unless the entire property is removed from the Zone A. Makes no sense to me. Anyone else ever run into this?
Hack
Yup. Lenders can demand anything they can get away with. The first time I encountered this exact same thing was probably 25 years ago. The house was on a distinct high spot but 90 percent of the remainder of the 10-acre tract was in Zone A. I talked directly with the lender involved to explain the details of the elevation certificate. He didn't care. He was going to make the borrower pay for the flood insurance no matter what. If the borrower didn't want to pay for flood insurance, he was going to have to find a different lender.
Holy Cow, post: 389079, member: 50 wrote: Yup. Lenders can demand anything they can get away with. The first time I encountered this exact same thing was probably 25 years ago. The house was on a distinct high spot but 90 percent of the remainder of the 10-acre tract was in Zone A. I talked directly with the lender involved to explain the details of the elevation certificate. He didn't care. He was going to make the borrower pay for the flood insurance no matter what. If the borrower didn't want to pay for flood insurance, he was going to have to find a different lender.
I pretty much told her she needed to either talk to someone else at the lender or get a different lender. I've never had flood insurance but I assume the policy is on the house specifically.
Yes. It addresses structural damage. The lender tried to make a big issue about harm being possible if the occupant didn't have ready ingress/egress at all times. He never could explain to me precisely what harm that could possibly be. Maybe if the septic system was saturated and you flushed the stool a couple hundred times you could cause water to flow out onto the floor of the house. That's the level of stupidity the lender was applying to the situation.
The lender is only interested in their access to the property and to impede and add to the burden of the borrower.
I know many brokers that are nice little gals sitting in the comfort of their homes in their PJs and have the gift of a pleasant sales pitch to promise everything and such low payments to sign borrowers on to some mortgage company that has a goal to get all your money in a few years by applying as much fine print to the payments as possible.
Lenders have a deposed property division that depends upon defaults on their loans.
There is the probability of more money to be made in the resale of repossessed property.
The invention of variable interest rates is usually a one way street of going to the max when prime rate goes up and when prime rate goes down, the mortgage company does not lower their variable rate and keep it at max.
Getting a new lender and cutting off years off payments is usually the best option.
True, the lender can still require flood insurance as explained in the attachment.
The good news is your client's rate will be reduced.
This is a timely thread. I apologize for this slight hijack, but here is an e-mail that I just sent this week to a potential client (someone I have known for 30+ years):
Ten four, good buddy. If you don't mind I hope you will indulge me with a few more back and forth questions and discussion on this topic. I feel comfortable asking you these questions because I know you better than my average joe client. These are only observations of mine along with questions for you as a property owner to help in my understanding. Please don't take any of these questions as any sort of "judgement" or opinions, sometimes e-mail can come across in unintended ways.
Okay, so the first question I have is this, did this property flood in the Great Flood of 6-7-8 as I like to call it, June 7, 2008?
Second is just a comment that most property owners may not realize. These FEMA flood maps merely represent some engineers' mathematical model of a 1% annual probable rainfall event happening within the noted limits. Some call this a 100-year rainfall event, which can be a little misleading.
Actual flooding events vary widely from any math model. Some say that the 2008 event mimicked a 500 or 1,000 year event.
So I often wonder what is the logic (probably the premiums, of which I am totally clueless) for a property owner with property within FEMA Flood Insurance Rate Map limits, even if close to the edge, to try to avoid paying for flood insurance? Believe me though, I am as anti-insurance as the next fella, generally speaking.
What if we are successful in avoiding the requirement for flood insurance, then the property is somehow damaged by some enormous flood? I would feel bad to have been part of the team that helped to avoid flood insurance at that point in time.
Thank you so much for listening to this. I have wanted to ask a property owner these questions for many years. I hope you don't mind sharing more of your thoughts with me.
I have not heard back from him yet. What are your thoughts fellow beer leggers?
Hack, post: 389074, member: 708 wrote: Did a LOMA for a client removing the structure from a Zone A. No issues went through as usual. We've done dozens in last few years. She called this morning in a snit. It seems her lender will not remove the flood insurance requirement unless the entire property is removed from the Zone A. Makes no sense to me. Anyone else ever run into this?
Hack
Yes. We had a client with a home on the top of a "cliff" 25 feet above the creek and many feet (I don't remember exactly) above the flood elevation. The center of the creek was the property line so part of it was in the flood plane. The lender required flood insurance because "a portion of the property lies within the flood plane." His premiums turned out to be nominal, but he still had to pay.
Andy
Flood hazard zones are regulatory lines. They may or may not relate to physical risk.
I would tell the lady that the LOMA doesn't stop flood water. Get the insurance at the highly reduced rate that comes without being in the SFHA.
[USER=197]@Brad Ott[/USER]
You probably recall the story I have told more than once on here about the fellow who had me checkout his situation and discovered his critical location was 14 inches above the flood number. He was desperate to stop paying flood insurance. As soon as he received confirmation from FEMA that his LOMA had been approved he canceled his flood insurance policy. About two months later he had 10 inches of water in his house for about two days.
Here is an unverified statistic that I have heard in more than one EC or EC related seminar - "Over the course of a 30 yr mtg. the probability of damage by
fire is 7% and the probability of damage by water is 28%."
thebionicman, post: 389749, member: 8136 wrote: Flood hazard zones are regulatory lines. They may or may not relate to physical risk.
I would tell the lady that the LOMA doesn't stop flood water. Get the insurance at the highly reduced rate that comes without being in the SFHA.
I never advise my clients one way or the other. I do explain that removing the home from the mandatory zone may restore their right to to take all the risk or to carry insurance and mitigate some of the risk. My crystal ball cracked many moons ago.
Hack
Hack, post: 389074, member: 708 wrote: Anyone else ever run into this?
All the time on lakefront lots. We just show the contour line for Zone A on the survey. As long as the contour is not running through the structure everything sails right through.
I live way above the local flood plain which is down in the valley and I'm about 100' above.
But I'm also near the low point and in a sweeping curve for the subdivision road, all the water runs down and turns right at my house and my house is on the low side of the road, so I checked into flood insurance.
I just asked my insurance company for a quick estimate,,,,,,,
$400 extra
I also let them know removing them from the program doesn't mean that they will not suffer flood damage.
Andy Bruner, post: 389738, member: 1123 wrote: Yes. We had a client with a home on the top of a "cliff" 25 feet above the creek and many feet (I don't remember exactly) above the flood elevation. The center of the creek was the property line so part of it was in the flood plane. The lender required flood insurance because "a portion of the property lies within the flood plane." His premiums turned out to be nominal, but he still had to pay.
Andy
We have surveyed developments where the developer would have us make the rear lot line the same as the 100 year flood line. They would donate that portion of the development as a green way so that the lots did not have floodplain on them.
