The New Interagency Flood Q&A | Compliance Alliance

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Question 1 of 10

1. Question
1. Applicability 4. Does a lender have to require flood insurance on properties that are mapped out of a Special Flood Hazard Area?
- A. Yes, but only if it was made, increased, renewed, or extended on or after January 1st, 2016.
- B. Yes, any property that was in a Special Flood Hazard Area when the loan originated must have flood insurance for the term of the loan.
- C. No, and the bank may not require the borrower to maintain flood insurance if their property is mapped out of the Special Flood Hazard Area.
- D. No, but the bank may require flood insurance for safety and soundness purposes, where permitted by State law.
Question 2 of 10

2. Question
2. Applicability 13. Which of the following events are not considered “triggering events” (AKA “MIRE” event)?
- A. The remapping of a building securing a loan into a Special Flood Hazard Area.
- B. Making a loan on or after January 1st, 2016, that is security by property located in a Special Flood Hazard Area.
- C. The purchase of a loan from another lender.
- D. Both A. and C. are correct.
Question 3 of 10

3. Question
3. Applicability 15. Which of the following are exempt from the mandatory purchase requirement? Select all that apply.
- A. The original principal balance of the loan is less than $10,000 and the repayment term is one year or less.
- B. The property is state-owned and is covered under a self-insurance policy.
- C. The detached garage of the property located in a Special Flood Hazard Area that only has one studio apartment on the second floor.
- D. The original principal balance of the loan is $3,500 and the loan term is 6 months.
Question 4 of 10

4. Question
4. Mandatory 4. If a private insurance policy includes the ‘compliance aid’ statement, is the lender required to accept the policy?
- A. Yes, because the 'compliance aid' statement means the policy meets the requirements of the flood rules.
- B. Yes, because the 'compliance aid' statement means the policy qualifies as 'private flood insurance', and those must be accepted.
- C. No, because lenders may choose whether or not to rely upon the 'compliance aid' statement and may further review the policy.
- D. No, because the 'compliance aid' statement is no longer included under Risk Rating 2.0.
Question 5 of 10

5. Question
5. Private Flood Compliance 1. If a private flood insurance policy has a higher deductible than the maximum NFIP-permitted deductible, when may the lender still accept the policy?
- A. A private policy for a commercial building provides $1,000,000 of flood insurance coverage. The deductible of that policy is more than permitted under NFIP, but it's reasonable based on the borrower's financial condition.
- B. A private policy for a residential building provides $200,000 of flood insurance coverage (equal to that required under NFIP based on the loan amount and insurable value). The deductible of that policy is higher than permitted under NFIP, but it's reasonable based on the borrower's financial condition. ed the maximum permitted by NFIP.
- C. A private policy for a commercial building provides $1,000,000 of flood insurance coverage. The borrower requested a deductible three times higher than allowable under NFIP, but the deductible is not reasonable based on the borrower's financial condition.
- D. Never. The deductible may not exceed the maximum permitted by NFIP.
Question 6 of 10

6. Question
6. SFHDF 4. May a lender rely on a previous Special Flood Hazard Determination when making a new loan to a new borrower?
- A. Yes, a lender can rely on a prior determination when making a new loan, provided it was not made more than seven years ago.
- B. Yes, a lender can rely on a prior determination when making a new loan, provided it was not made more than seven years ago, the property has been owned by the new borrower for at least seven years, and there have been no map revisions or updates affecting the property since the determination was made.
- C. Yes, a lender can rely on a prior determination when making a new loan, provided it was not made more than seven years ago, the basis for the determination was set forth on the SFHDF, and there have been no map revisions or updates affecting the property since the determination was made.
- D. No, a lender may not rely on a prior determination when making a new loan unless: i) it is the same lender who ii) makes multiple loans to iii) the same borrower for iv) the same real estate; v) the determination was not made more than seven years prior to the transaction date; vi) the basis for the determination was set forth on the SFHDF; and vii) there have been no map revisions or updates affecting the property since the determination was made.
Question 7 of 10

7. Question
7. Zone 1. Does a lender have to reconcile a discrepancy between the flood zone on the Special Flood Hazard Determination Form?
- A. Yes, a flood zone determines the premium rate of a flood insurance policy, so these must match.
- B. Yes, although flood zones are not always going to end up matching, the lender still must reconcile them or verify accuracy.
- C. No, the SFHDF tells the lender whether a property requires flood insurance, whereas policy premiums are determined by more than just the flood zone.
- D. Yes and No. If it's an NFIP policy, the lender need not reconcile a zone discrepancy. If it’s a private policy, the lender must reconcile a zone discrepancy.
Question 8 of 10

8. Question
8. Notice 2. When is a lender required to notify a borrower that their property is in a Special Flood Hazard Area?
- A. Within a reasonable time – generally at least 10 calendar days, provided the borrower is made aware of their responsibilities and can purchase flood insurance before completing the loan transaction.
- B. Within 3 business days of the lender learning that the property requires flood insurance.
- C. As soon as possible, but in no instance after consummating the loan transaction.
- D. The lender is not required to notify the borrower. The company that completes the determination will notify them.
Question 9 of 10

9. Question
9. Condo and Co-Op 4. What is a lender required to do if they determine a borrower’s condo association does not have an adequate Residential Condominium Building Association Policy (RCBAP)?
- A. The lender is required to decline the application because the condo building does not provide sufficient flood insurance coverage according to the flood rules.
- B. The lender must require the unit owner to obtain coverage in an amount sufficient to meet the flood insurance requirements.
- C. The lender must place the loan file on hold until the condo association issues a resolution to purchase a flood insurance policy to cover the building.
- D. The lender must place the loan file on hold until the borrower provides proof the condo association has an RCBAP with sufficient flood coverage.
Question 10 of 10

10. Question
10. Force Placement 14. When is a lender required to notify the borrower that the borrower’s force-placed flood insurance is going to renew?
- A. Within 30 calendar days of receiving the renewal notice from the insurance carrier.
- B. Within 20 business days of receiving the renewal notice from the insurance carrier.
- C. Never, although the lender may notify the borrower, including that purchasing their own policy may be less expensive.
- D. Never. The lender is prohibited from notifying the borrower that their force placed policy is renewing or has renewed.

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