FLOOD INSURANCE EXAMS SCRIPT ANSWERS AND
QUESTIONS SET A+
✔✔The purpose of the Notice of Special Flood Hazard and Availability of Federal
Disaster Relief Assistance is to inform the borrower that the property is in a Special
Flood Hazard Area. - ✔✔
✔✔What would be the minimum amount of flood insurance required for a loan secured
by a one- to four-family residential property in an SFHA with a principal balance of
$225,000 and a replacement cost value of improved property of $200,000? -
✔✔$200,000-The amount of insurance required is the lesser of the principal value of the
loan, the replacement cost value of the improved property securing the loan, or the
maximum available under NFIP ($250,000 for residential loans).
✔✔All financial institutions are required to comply with the escrow requirements. - ✔✔F-
A small lender exception allows certain financial institutions to be exempt from the
escrow requirements.
✔✔If the borrower fails to purchase additional coverage within __ days of the
notification, your financial institution must purchase flood insurance on the borrower's
behalf. - ✔✔45- The borrower has 45 days to purchase insurance after notification.
✔✔When your financial institution extends a loan secured by property in an SFHA, it
must mail or deliver a written __________ to the borrower and servicer. - ✔✔notice
✔✔The amount of flood insurance required is the lesser of the __________ cost value
of the improved property, mobile home, and/or personal property securing the loan. -
✔✔replacement
✔✔If the borrower fails to obtain insurance within __________ days of the notification, a
financial institution must purchase insurance on behalf of the borrower. (Hint: number;
use digits!) - ✔✔45
, ✔✔Fannie Mae loans are exempt from flood insurance requirements. - ✔✔F
✔✔As long as there is at least some flood insurance on the collateral securing a loan, a
financial institution may not perform a forced placement. - ✔✔F
✔✔Flood insurance requirements apply to: - ✔✔First mortgages
Second mortgages
Home equity loans
^^^^All of the above
✔✔Flood insurance requirements apply to consumer loans only. - ✔✔F
✔✔A separate flood insurance policy must be in place for each mortgage on a property.
- ✔✔F
✔✔ The purpose of the flood insurance requirements is to: - ✔✔Inform and protect
✔✔A home equity loan is not considered eligible for flood insurance. - ✔✔F
✔✔An SFHDF is used to determine: - ✔✔Whether the property lies in an SFHA
✔✔A detached structure that is joined by a structural connection to a part of a
residential property is considered exempt from the flood insurance requirements. - ✔✔F
✔✔NFIP insurance is available for: - ✔✔Residential buildings
Commercial buildings
Agricultural buildings
**All of the above
✔✔An institution's failure to use the SFHDF to determine if a property lies in an SFHA is
a potential violation of the flood insurance requirements. - ✔✔T
✔✔Financial institutions are required to accept private flood insurance that meets both:
- ✔✔The definition of private flood insurance and the mandatory purchase requirement
✔✔Because only one flood insurance policy can be issued per structure, it should be
issued in an amount sufficient to cover both the first mortgage and the second
mortgage, if there is one. - ✔✔T
✔✔The intended purpose of the loan, as opposed to the collateral, is the critical factor in
the applicability of the flood insurance rules. - ✔✔F
QUESTIONS SET A+
✔✔The purpose of the Notice of Special Flood Hazard and Availability of Federal
Disaster Relief Assistance is to inform the borrower that the property is in a Special
Flood Hazard Area. - ✔✔
✔✔What would be the minimum amount of flood insurance required for a loan secured
by a one- to four-family residential property in an SFHA with a principal balance of
$225,000 and a replacement cost value of improved property of $200,000? -
✔✔$200,000-The amount of insurance required is the lesser of the principal value of the
loan, the replacement cost value of the improved property securing the loan, or the
maximum available under NFIP ($250,000 for residential loans).
✔✔All financial institutions are required to comply with the escrow requirements. - ✔✔F-
A small lender exception allows certain financial institutions to be exempt from the
escrow requirements.
✔✔If the borrower fails to purchase additional coverage within __ days of the
notification, your financial institution must purchase flood insurance on the borrower's
behalf. - ✔✔45- The borrower has 45 days to purchase insurance after notification.
✔✔When your financial institution extends a loan secured by property in an SFHA, it
must mail or deliver a written __________ to the borrower and servicer. - ✔✔notice
✔✔The amount of flood insurance required is the lesser of the __________ cost value
of the improved property, mobile home, and/or personal property securing the loan. -
✔✔replacement
✔✔If the borrower fails to obtain insurance within __________ days of the notification, a
financial institution must purchase insurance on behalf of the borrower. (Hint: number;
use digits!) - ✔✔45
, ✔✔Fannie Mae loans are exempt from flood insurance requirements. - ✔✔F
✔✔As long as there is at least some flood insurance on the collateral securing a loan, a
financial institution may not perform a forced placement. - ✔✔F
✔✔Flood insurance requirements apply to: - ✔✔First mortgages
Second mortgages
Home equity loans
^^^^All of the above
✔✔Flood insurance requirements apply to consumer loans only. - ✔✔F
✔✔A separate flood insurance policy must be in place for each mortgage on a property.
- ✔✔F
✔✔ The purpose of the flood insurance requirements is to: - ✔✔Inform and protect
✔✔A home equity loan is not considered eligible for flood insurance. - ✔✔F
✔✔An SFHDF is used to determine: - ✔✔Whether the property lies in an SFHA
✔✔A detached structure that is joined by a structural connection to a part of a
residential property is considered exempt from the flood insurance requirements. - ✔✔F
✔✔NFIP insurance is available for: - ✔✔Residential buildings
Commercial buildings
Agricultural buildings
**All of the above
✔✔An institution's failure to use the SFHDF to determine if a property lies in an SFHA is
a potential violation of the flood insurance requirements. - ✔✔T
✔✔Financial institutions are required to accept private flood insurance that meets both:
- ✔✔The definition of private flood insurance and the mandatory purchase requirement
✔✔Because only one flood insurance policy can be issued per structure, it should be
issued in an amount sufficient to cover both the first mortgage and the second
mortgage, if there is one. - ✔✔T
✔✔The intended purpose of the loan, as opposed to the collateral, is the critical factor in
the applicability of the flood insurance rules. - ✔✔F
