Flood Insurance

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howard71
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Joined: Wed Oct 28, 2020 11:10 am

Flood Insurance

Post by howard71 »

When I bought my house back in 2006 flood insurance wasn't required and when I refinanced through HARP a few years ago it still wasn't required.

I refinanced again last year and still wasn't told that flood insurance was required.

Yesterday however, the new mortgage company sent me a letter telling me it WAS required according to their subsequent research and gave me links to websites where I could either buy it or show proof that I had it. They didn't say anything about purchasing it for me within a certain time frame themselves at my expense like they did when they didn't have proof of my regular homeowner's insurance which I did have and always have had.

Which led me to believe they can't really require me to purchase it after already refinancing the loan without it. So I'm thinking I will simply ignore them and see if I hear from them again.

So if anyone has real expertise in such matters I would appreciate it if you would enlighten me. If you just want to tell me I should have flood insurance, don't bother. That's not what I'm looking for.
Broken Man 1999
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Re: Flood Insurance

Post by Broken Man 1999 »

At the very least, make sure you check your address in the latest maps.

I think there has been changes recently.

Broken Man 1999
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Not Law
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Re: Flood Insurance

Post by Not Law »

If changes in the flood maps results in your home now being in a flood zone, the lender can force-place flood insurance for its protection only (you would not be covered for any loss), and charge you for the its cost - which will be far more than if you purchased a broader policy yourself. If you do not pay the lender can foreclose.
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3CT_Paddler
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Location: Marietta, GA

Re: Flood Insurance

Post by 3CT_Paddler »

Flood maps are constantly being updated across the country (a single map area may not be updated for 10-20 years). So it could be due to a host of reasons. Sometimes certain lenders may require it even though you are technically out of the floodplain (rare), but typically it is due to new maps for your area.

Without knowing your specific address its impossible to say what your case is.

I would not ignore your insurance company.
Lalamimi
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Location: Texas

Re: Flood Insurance

Post by Lalamimi »

Having been through Harvey here in Katy, Tx, and having several friends lose their homes (one had Flood Ins, one did not), I agree, buy it. First, pull up the new maps. Rates are the same since they are through FEMA, so no need to shop just call your home owner insurance. There is a 30 day waiting period, and you cannot buy if there is a named storm formed near you. We are not in a flood plain, but $400 a year is a small price to pay.
talzara
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Re: Flood Insurance

Post by talzara »

Not Law wrote: Wed Oct 13, 2021 12:29 pm If changes in the flood maps results in your home now being in a flood zone, the lender can force-place flood insurance for its protection only (you would not be covered for any loss), and charge you for the its cost - which will be far more than if you purchased a broader policy yourself. If you do not pay the lender can foreclose.
Forced-placed homeowners insurance costs a lot more than voluntary homeowners insurance.

Flood insurance doesn't. The NFIP charges the lender the same price that it would charge the homeowner.
talzara
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Re: Flood Insurance

Post by talzara »

Lalamimi wrote: Wed Oct 13, 2021 2:55 pm Having been through Harvey here in Katy, Tx, and having several friends lose their homes (one had Flood Ins, one did not), I agree, buy it. First, pull up the new maps. Rates are the same since they are through FEMA, so no need to shop just call your home owner insurance. There is a 30 day waiting period, and you cannot buy if there is a named storm formed near you. We are not in a flood plain, but $400 a year is a small price to pay.
The OP has already missed the opportunity to buy at subsidized rates. Since October 1, 2021, the NFIP has been pricing new policies based on their actuarial risk.

If you have low flood risk, your premium might actually go down over the next 18 months. The new rates will begin to take effect for renewals on April 1, 2022.
Lalamimi
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Location: Texas

Re: Flood Insurance

Post by Lalamimi »

talzara wrote: Wed Oct 13, 2021 6:45 pm
Lalamimi wrote: Wed Oct 13, 2021 2:55 pm Having been through Harvey here in Katy, Tx, and having several friends lose their homes (one had Flood Ins, one did not), I agree, buy it. First, pull up the new maps. Rates are the same since they are through FEMA, so no need to shop just call your home owner insurance. There is a 30 day waiting period, and you cannot buy if there is a named storm formed near you. We are not in a flood plain, but $400 a year is a small price to pay.
The OP has already missed the opportunity to buy at subsidized rates. Since October 1, 2021, the NFIP has been pricing new policies based on their actuarial risk.

If you have low flood risk, your premium might actually go down over the next 18 months. The new rates will begin to take effect for renewals on April 1, 2022.
Good to know. We renewed in June, but I doubt ours will go down, due to history of the area. Thanks!
Topic Author
howard71
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Re: Flood Insurance

Post by howard71 »

talzara wrote: Wed Oct 13, 2021 6:42 pm
Not Law wrote: Wed Oct 13, 2021 12:29 pm If changes in the flood maps results in your home now being in a flood zone, the lender can force-place flood insurance for its protection only (you would not be covered for any loss), and charge you for the its cost - which will be far more than if you purchased a broader policy yourself. If you do not pay the lender can foreclose.
Forced-placed homeowners insurance costs a lot more than voluntary homeowners insurance.

Flood insurance doesn't. The NFIP charges the lender the same price that it would charge the homeowner.
Thanks for the only reply that really made sense.

When I refinanced my home last year for the 3rd time, nothing was said about flood insurance. When the mortgage company it eventually
ended up with didn't have a record of my homeowner's insurance they sent me a letter telling me to provide them with the information
or they would purchase it for me at my expense. I had it and have always had it even though I have no escrow account so I just sent them
the information.

When the flood insurance letter came there was nothing in it about purchasing it for me. They were just asking me to provide them with the
information and giving me some links from where I can buy it. So I really question whether they can legally do this or not. One of the
posters on this thread said they could but I'm not sure if they know what they are talking about.

If I'm willing to take the rest of damage due to flooding which the insurance company won't pay for, what business is that of theirs?

I may very well end up buying flood insurance but right now I'm just going to ignore them and see what happens for the fun of it. If you
are right, then it won't cost me any more if they buy it for me I wonder how that will even work since I don't have an escrow account
and my payment is fixed.
MissMolly
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Re: Flood Insurance

Post by MissMolly »

Having worked in the mortgage industry for over 40 years I can assure you that if the flood maps were revised, and if your property is now in a flood zone which requires flood insurance, under Federal law, your mortgage company is required to ensure the property is adequately covered. If you fail to get flood insurance they will force-place it. Also, under Federal law, mortgage companies are required to escrow for flood coverage even though your other items (homeowners insurance & property taxes) may be non-escrow. The mortgage company has no recourse. It is Federal law.
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ResearchMed
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Re: Flood Insurance

Post by ResearchMed »

MissMolly wrote: Sat Oct 16, 2021 7:54 pm Having worked in the mortgage industry for over 40 years I can assure you that if the flood maps were revised, and if your property is now in a flood zone which requires flood insurance, under Federal law, your mortgage company is required to ensure the property is adequately covered. If you fail to get flood insurance they will force-place it. Also, under Federal law, mortgage companies are required to escrow for flood coverage even though your other items (homeowners insurance & property taxes) may be non-escrow. The mortgage company has no recourse. It is Federal law.
[emphasis added]

We've always paid our flood insurance directly, just like our other home insurance and taxes. It hasn't been escrowed, unless... we've been double paying all these years...
Do we need to check on this, albeit possibly *very* belatedly?

RM
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Topic Author
howard71
Posts: 155
Joined: Wed Oct 28, 2020 11:10 am

Re: Flood Insurance

Post by howard71 »

MissMolly wrote: Sat Oct 16, 2021 7:54 pm Having worked in the mortgage industry for over 40 years I can assure you that if the flood maps were revised, and if your property is now in a flood zone which requires flood insurance, under Federal law, your mortgage company is required to ensure the property is adequately covered. If you fail to get flood insurance they will force-place it. Also, under Federal law, mortgage companies are required to escrow for flood coverage even though your other items (homeowners insurance & property taxes) may be non-escrow. The mortgage company has no recourse. It is Federal law.
Thanks for the info.

I'm assuming the mortgage company will make that more clear in a subsequent letter if it's true and I ignore them.
Cyclone
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Re: Flood Insurance

Post by Cyclone »

If the lender is a "small servicer" under the regulations (and I'm not going to bother looking up that definition tonight), they are exempt from the requirement to escrow flood insurance payments. The lender here isn't doing it right. Their letter is supposed to warn that if flood insurance isn't obtained they will force-place. But none of that really matters - if the property is now in a flood zone starting with A or V, flood insurance is required both to protect the borrower and the lender.
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crinkles2
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Re: Flood Insurance

Post by crinkles2 »

Interesting - I just got new House insurance. We don't live in a place possible to flood, but could buy flood insurance (automatically included).

Many places though are within flood zones and no longer insurable :shock:
Kensai
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Re: Flood Insurance

Post by Kensai »

I went through similar purchasing my home a couple years ago.

Property is on the edge of a flood zone, and the far corner of the garage "touches" the flood zone.

I suggest purchasing (Sure don't want fines/foreclosed on over it do you?). In my case it was holding up financing. Then I suggest finding documentation/arguing if you are correct that the house structure itself is not in a flood zone.

Between the purchase, and refinance I had to argue both times about it - at the end of the day I purchased 1 year of flood insurance and was not (and chose not to) renew flood coverage.
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