[Compliant1]

We currently have a loan on a retail shopping mall in which we have a deed of trust filed on the property. Our borrower leased a portion of the land to Whataburger, who built a building on the property that is mortgaged to us. We did not provide any funds to build this building. Who is required to enforce the flood insurance regulation, the lender of the real estate or the lender that provided the money to build the building (leasehold interest).

[jholzknecht]

The flood insurance regulations come in play when a lender makes, increases, renews or extends a loan secured by a building or a mobile home that is located in a special flood hazard area.

At the time your loan was made it was secured by a deed of trust on the property. If there was one or more building on the property at that time and the building(s) was located in a SFHA then you should have complied with all applicable flood insurance requirements. If there were no buildings at the time of your loan, then no flood insurance was required. At a later date if you increased, renewed or extended your loan and buildings were located on the property at that time you should have complied with all applicable flood insurance requirements.

If another lender made a loan to construct the building and the construction loan is secured by the building, then the construction lender should have complied with all applicable flood insurance requirements.

Each lender is responsible for assuring adequate flood insurance is in place for their loan. FEMA will only issue a single flood insurance policy on the building. The lenders must cooperate to assure that the single policy is in an amount sufficient to protect both lenders.

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