[MBT_Compliance1]

Message: Loan was made in August 2015 with life of loan flood monitoring obtained and determination was on SFHDF. Property was not in a flood zone. Borrower returns 7 months later in March 2016 for an additional loan secured by the same property. Bank has not been notified of a flood map revision by the flood monitoring vendor. Based on the interagency q&a below, may we rely on the existing flood determination?

Proposed question and answer 61
(final question and answer 68)
addressed the circumstances when a
lender may rely on a previous special
flood hazard determination. The
Agencies received several comments
concerning this question and answer.
One commenter suggested that, if a
lender maintains life-of-loan tracking,
there is little benefit in obtaining a new
special flood hazard determination
when renewing, refinancing, or
extending a loan if the original
determination is older than seven years.
The authority to rely on a previous
determination made within the previous
seven years if that determination meets
certain requirements is statutory (42
U.S.C. 4104b(e)). Accordingly, seven
years is the maximum period during
which a lender may rely on a previous
determination, even if the lender has
maintained life-of-loan tracking.
Two commenters suggested that the
proposed question and answer should
also address whether a lender may rely
on one determination if a lender makes
multiple loans to one borrower, all of
which are secured by the same
improved property. For example, it
should address when a lender may rely
on a single determination when making
a home purchase loan and a subsequent
home equity loan, both secured by the
same residence. The situation described
by the commenters is similar to the
example of a refinancing or assumption
by a lender, which obtained the original
flood determination on the same
security property. In that case, the
question and answer states that the
lender may rely on the original
determination if the original
determination was made not more than
seven years before the date of the
transaction, the basis of the
determination was set forth on the
SFHDF, and there were no map
revisions or updates affecting the
security property since the original
determination was made. The Agencies
based this interpretation on the premise
that a refinancing would be the
functional equivalent of either a loan
extension or renewal. Subsequent loans
to the same borrower secured by the
same improved real estate could be
deemed to be the functional equivalent
of increasing the amount of the original
loan. Therefore, if the original
determination was made not more than
seven years before the date of the
transaction, the basis of the
determination was set forth on the
SFHDF, and there were no map
revisions or updates affecting the
security property since the original
determination was made, a lender may
similarly rely on a previous
determination if the lender makes
multiple loans that are secured by the
same building or mobile home. The
Agencies have revised the proposed
question and answer to also address
subsequent loans by the same lender
secured by the same improved real
estate.

[rcooper]

An institution may rely on a previous determination when it increases,
extends, renews, or purchases a loan. Subsequent transactions by the same
institution with respect to the same property, such as assumptions,
refinancings and junior lien loans, are considered renewals and you may use the an existing determination if:
1) The previous determination is not more than seven years old; and
2) No new or revised flood map has been issued in the interim; and
3) The determination was recorded on the SFHDF.

Assuming you have life of loan coverage, you would likely have have been notified of a map change. In addition, loans for which you will use an existing determination you need to consider life of loan when the original loan is paid off before the secondary loans (ask your flood determination provider if there is a way to continue LoL for that property).

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