[rblowery1]

We have a good customer who has requested a LOC to purchase foreclosure homes at auction. We will have additional collateral but will take a DOT on the purchased property, immediately following the purchase. With this, we don’t know the property address until our borrower has already purchased the property.
We would immediately get a flood cert and if there are issues, the borrower would obtain FI.
How can we be in compliance with the timing of notices under this scenario ? It seems I read where there is some discretion when a. I bike home is purchased but the “lot” it will sit on is. It identifies at the time of purchase
Just trying to make sure we stay on the right side. Thx

Brian

Topic

[jholzknecht]

The typos in your question result in a lack of clarity, but it appears that you have a challenge.

For a line of credit you may obtain insurance for the full amount of the line or for a lesser amount, but you can’s make an advance unless adequate flood insurance is in place. The constant shifting of your collateral will be a challenge. One option is to establish an open-end line of credit secured by collateral that does not change. Your customer can make immediate purchases up to the limit of the line. Upon completion of the transaction you can make a closed-end loan secured by the purchased property following appropriate flood insurance procedures with the proceeds used to pay down the LOC and ready it for the next purchase.

[Author]

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