Relying on Previous Flood Determination

Find all our Flood Resources here – https://store.bankerscompliance.com/#?keyword=Flood&type= Ready for the article find it in our Lending Free Resources – Search Flood under product files. https://store.bankerscompliance.com/#/myproducts/product/7beb48b7-6e90-43a5-acf0-5d4304c5335b?searchFilter.keyword= This line goes back to page 14, number four and relying on previous determinations.…

Relying on Previous Flood Determination

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Find all our Flood Resources here – https://store.bankerscompliance.com/#?keyword=Flood&type=

Ready for the article find it in our Lending Free Resources – Search Flood under product files. https://store.bankerscompliance.com/#/myproducts/product/7beb48b7-6e90-43a5-acf0-5d4304c5335b?searchFilter.keyword=

This line goes back to page 14, number four and relying on previous determinations. If I am refinancing a property previously financed by our bank, but purchased by a new borrower, can you still rely on that prior determination? In other words, same property, different borrower.

The criteria that you see on page 14, Jarod, can you go to slide 30 for me, if you would. Remember, we have to meet these three criteria. If we say yes, yes, yes, to all three of those. Then the other thing that’s brought up on page 14, number four is basically same lender, same property. That’s really the issue. It’s not same borrower. Let me illustrate. Diane is buying Jarod’s house. Jarod had a loan with us. I have a flood determination in his file and I take it out of his file and I put it in Diane’s file. Yep. You can do that. We’re making a new loan, but we do not have to have a new determination.

Now I’m going to throw out one little caution now that I’ve said that. Look at the very beginning of the answer. It says, “It depends.” And it quotes this, it references this 42 USC 4104be. Ooh. That was a complicated one. Jarod and I looked that up years ago. Jarod, I think you had just started. I remember looking at this and it basically says it has to be prepared for the lender and it has to be guaranteed if you’re outsourcing it. That second criteria I just gave you, if you’re using a flood vendor to do your determinations, I’m going to bet that they say this determination is for you, lender, for this loan. And you don’t have a right to go from this loan to that loan, to that loan with it. And if you do, we’re not guaranteeing it. It’s kind of like a credit report. It’s good for your eyes only and for this use. And if you’re going to use it again, you need to pay us again is what the flood vendor contracts probably says.

I haven’t seen yours. I don’t know for sure, but I’m going to bet it has something like that. If you were to pull it out of Jarod’s file and put it in Diane’s file because Diane is buying Jarod’s house, you might be violating your contract, which in a sense, I’m kind of coming through a backdoor on you here, you might be in violation of 42 USC 4104 there, which in a sense says you can’t do that. With all that said, it depends is what the answer was. The reg allows it. If you were doing your own determinations, you bet. You could pull it from one file and put it in another, even if they’re different borrowers. I’m not so sure that that’s not going to violate your contract with your flood determination company so I’ll come back and wrap this up. It’s probably best to do a new determination when making a new loan. How about that?

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