[madunn]

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

Topic

[jholzknecht]

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

[TheBank]

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?

[Anonymous]

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.

[TheBank]

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

[Anonymous]

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.

[TheBank]

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?

[Anonymous]

No.

[Author]

Replies