[lumullins1121]

We have a situation where we are financing the purchase of a townhouse. The townhouse is in one building with 3 townhouse units. We are only financing one of those units. The unit at the opposite end of the building is located in a flood zone but the actual unit we are financing is NOT located within a flood zone. Do we have to require flood insurance on the unit we are financing?

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[Kimberly Boatwright, CAMS, CRCM]

Townhomes are treated as individual SFR. If the unit you are taking is not in the Special Food Hazard Area, then the borrower would not be required by Flood rules to get flood insurance. However, as a Safety and Soundness precaution you Institution could consider requiring it to protect your collateral. If you do that you will need to make it a standard practice for consistency.

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