FLOOD INSURANCE EVALUATION EXAM ANSWERS
AND QUESTIONS SET A+
✔✔How long do you have to wait before FI is effective? - ✔✔If it is in connection with
MIRE event, it is immediately effective, otherwise it is a 30 day waiting period. If it is
within 13 months of rate map change, then it is 1 day.
✔✔If a bank is the second on a home, and the borrower only has FI coverage up to the
first lien loan on the home, does the bank need to make a borrower get two policies? -
✔✔No. The borrower only needs 1 policy, but the bank should have them talk to agent
and get enough coverage to cover both loans/minimum.
✔✔If a bank has a HELOC on a home in a flood zone, how much of the HELOC must
be insured? What if it is only 25% drawn? - ✔✔The bank has to have FI based on the
lesser of the three rule. However, for open-end lines they can require FI based on the
total amount of the line (i.e. insure off the full credit line amount) OR have procedures to
periodically update coverage amounts.
✔✔What is an RCBAP? How much insurance must a bank require for a condo? - ✔✔-
Residential Condo-minimum Building Association Policy (RCBAP)
-Basically, RCBAP's can be up to 100% of replacement cost, OR 250,000 x #of units,
whichever is lesser.
-SO, same general 3 requirements apply, with the difference being see what unit's
coverage is under RCBAP. If full amount possible, nothing necessary. If less than that,
get a Dwelling Policy to max out lesser of 1. loan value, 2. 250k max 3. replacement
cost value (per unit)
✔✔If there is a condominium building, that is non-residential, then how much insurance
can it have under RCBAP? - ✔✔It CAN'T have an RCBAP if non-residential. The
commercial rules apply here, i.e. 500k max building 500k max contents.
✔✔IF there are multiple structures securing a loan, do they ALL need to be insured? -
✔✔Each must be covered by some amount of FI is the rule. Even if 1 building would be
sufficient to cover the collateral.
, ✔✔Are bank's required to escrow for flood insurance? - ✔✔They are required to only for
residential real estate secured. There are two exceptions. 1-Bank Size - total assets
less than $1 billion of prior two years unless bank was required by to escrow other items
by law, or has a uniform policy to escrow.
2 - Loan Type - basically commercial loans, HELOCs/second liens, condos (if they have
sufficient RCBAP, non performing, loans less than 12 months.
✔✔If a bank previously wasn't required to escrow for FI on residential loans because of
bank size, and the bank grows to over 1 billion in previous two calendar years, when
does it have to start escrowing? What about existing loans? - ✔✔It has to start
escrowing escrowing by July 1, and provide any loans on books already notice of option
to by September 30 in year that status changes.
✔✔What is the difference between a LOMR and a LOMA? - ✔✔-Letter of Map
Amendment: is for areas that won't flood, but were included in flood zone (i.e. a hill)
-Letter of Map Revision: is when you have physical change to raise land above 100-
year flood level.
✔✔When is a bank allowed to rely on a previous flood determination in the following
situations...
1. It is MIRE a loan
2. FEMA does a map revision
3. The previous determination form is 7 years old? - ✔✔1. It can only rely on previous
determinations (not 7 years old) when IRE or purchasing a loan. Making a loan requires
a NEW determination form unless its the same bank refinancing loan.
2. If bank knows of map revision, it can't rely on form.
3. can't rely on forms more than 7 years old.
✔✔Is a bank required to monitor for map changes? Does it have to get new SFHDF
every seven years? - ✔✔No and No. But there are other requirements that would trigger
bank to "force place" FI.
✔✔If a bank determines FI coverage is inadequate, what must it do? - ✔✔It must force-
place insurance after sending notice and 45 days.
✔✔IF a bank force places FI, and finds out a borrower obtained a policy/already had
one, what must it do? - ✔✔Refund the borrower paid premiums for force placed
insurance for WHENEVER there were two policies in place.
✔✔When can a bank actually force place a policy? - ✔✔It can force place it as soon as
it knows it was deficient, but doesn't have to until 45 day period. It can charge the
borrower for that 45 day period too. However, notification still has to be given, and if the
borrower gets it within 45 days or after, premiums must be refunded when two policies
were in place.
AND QUESTIONS SET A+
✔✔How long do you have to wait before FI is effective? - ✔✔If it is in connection with
MIRE event, it is immediately effective, otherwise it is a 30 day waiting period. If it is
within 13 months of rate map change, then it is 1 day.
✔✔If a bank is the second on a home, and the borrower only has FI coverage up to the
first lien loan on the home, does the bank need to make a borrower get two policies? -
✔✔No. The borrower only needs 1 policy, but the bank should have them talk to agent
and get enough coverage to cover both loans/minimum.
✔✔If a bank has a HELOC on a home in a flood zone, how much of the HELOC must
be insured? What if it is only 25% drawn? - ✔✔The bank has to have FI based on the
lesser of the three rule. However, for open-end lines they can require FI based on the
total amount of the line (i.e. insure off the full credit line amount) OR have procedures to
periodically update coverage amounts.
✔✔What is an RCBAP? How much insurance must a bank require for a condo? - ✔✔-
Residential Condo-minimum Building Association Policy (RCBAP)
-Basically, RCBAP's can be up to 100% of replacement cost, OR 250,000 x #of units,
whichever is lesser.
-SO, same general 3 requirements apply, with the difference being see what unit's
coverage is under RCBAP. If full amount possible, nothing necessary. If less than that,
get a Dwelling Policy to max out lesser of 1. loan value, 2. 250k max 3. replacement
cost value (per unit)
✔✔If there is a condominium building, that is non-residential, then how much insurance
can it have under RCBAP? - ✔✔It CAN'T have an RCBAP if non-residential. The
commercial rules apply here, i.e. 500k max building 500k max contents.
✔✔IF there are multiple structures securing a loan, do they ALL need to be insured? -
✔✔Each must be covered by some amount of FI is the rule. Even if 1 building would be
sufficient to cover the collateral.
, ✔✔Are bank's required to escrow for flood insurance? - ✔✔They are required to only for
residential real estate secured. There are two exceptions. 1-Bank Size - total assets
less than $1 billion of prior two years unless bank was required by to escrow other items
by law, or has a uniform policy to escrow.
2 - Loan Type - basically commercial loans, HELOCs/second liens, condos (if they have
sufficient RCBAP, non performing, loans less than 12 months.
✔✔If a bank previously wasn't required to escrow for FI on residential loans because of
bank size, and the bank grows to over 1 billion in previous two calendar years, when
does it have to start escrowing? What about existing loans? - ✔✔It has to start
escrowing escrowing by July 1, and provide any loans on books already notice of option
to by September 30 in year that status changes.
✔✔What is the difference between a LOMR and a LOMA? - ✔✔-Letter of Map
Amendment: is for areas that won't flood, but were included in flood zone (i.e. a hill)
-Letter of Map Revision: is when you have physical change to raise land above 100-
year flood level.
✔✔When is a bank allowed to rely on a previous flood determination in the following
situations...
1. It is MIRE a loan
2. FEMA does a map revision
3. The previous determination form is 7 years old? - ✔✔1. It can only rely on previous
determinations (not 7 years old) when IRE or purchasing a loan. Making a loan requires
a NEW determination form unless its the same bank refinancing loan.
2. If bank knows of map revision, it can't rely on form.
3. can't rely on forms more than 7 years old.
✔✔Is a bank required to monitor for map changes? Does it have to get new SFHDF
every seven years? - ✔✔No and No. But there are other requirements that would trigger
bank to "force place" FI.
✔✔If a bank determines FI coverage is inadequate, what must it do? - ✔✔It must force-
place insurance after sending notice and 45 days.
✔✔IF a bank force places FI, and finds out a borrower obtained a policy/already had
one, what must it do? - ✔✔Refund the borrower paid premiums for force placed
insurance for WHENEVER there were two policies in place.
✔✔When can a bank actually force place a policy? - ✔✔It can force place it as soon as
it knows it was deficient, but doesn't have to until 45 day period. It can charge the
borrower for that 45 day period too. However, notification still has to be given, and if the
borrower gets it within 45 days or after, premiums must be refunded when two policies
were in place.
