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We are doing a large farm loan that has has an older barn on the property that looks like it can fall down at anytime. The appraiser stated when he does his appraisal report it will state that it has NCV. How do we handle this? Do we have to require some type of flood insurance? The appraiser stated he may could put in the report that it has NCV but cleanup value would be about $2500 if the appraisal board will allow his to do that. If the maximum deductible that we can allow is $5,000 can we waive the flood insurance? Or do we have to have the borrower get something from his insurance company stating it is not insurable?
If there is a barn (any building) in a flood plain regardless of use it will require flood insurance per the regulations. If the FI, using risk based decisions, will allow any deviation from the law requirement it would need to be documented in a policy etc. However, the law does require insurance on any budling in the flood plain.
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