What You Should Know About the Home Mortgage Disclosure Act
Understanding the Home Mortgage Disclosure Act (HMDA) is crucial for mortgage loan officers because the data required by the law helps the Federal...
2 min read
Steve Tschoepe : Thu, Mar 02, 2017
Buying property comes with a lot of administrative paperwork and legal requirements. One of those requirements says that mortgage lenders must determine whether the property lies in a flood zone. Read on to learn how you can better manage flood zone determination for your mortgage customers.
This law ties flood insurance premiums under the National Flood Insurance Program to the flood risk. In practical terms, that means that flood-prone areas (including areas that flood repeatedly) mean higher premiums for those property owners.
The law requires lenders to use the Emergency Management Agency's (FEMA) current flood insurance maps to identify whether the property the borrowers want to buy lies in a floodplain. The map is known as the FEMA Flood Insurance Rate Map (FIRM). If the property is in an area designated as prone to flooding, the borrowers must buy flood insurance (which may include higher premiums) to protect their property.
Even in areas where flood insurance is not a mandatory requirement, borrowers may find themselves eligible to buy flood insurance from the National Flood Insurance Program.
FEMA divides the flood insurance rate map into four areas and then subdivides three of the four areas into zones. The four areas include:
It's also important to know whether the property's elevation takes it out of harm's way above the floodplain (even if it is in the floodplain area). Such properties would not be subject to mandatory flood insurance or floodplain regulations.
Whether your business is new to mortgage servicing or you've acquired a business that now stretches your mortgage servicing capability beyond your current staff, ABT has solutions and products that can help you manage all aspects of your mortgage business.
To learn more about how property owners can fight FEMA floodplain determinations with evidence of higher elevations, see the Lens (NOLA) article entitled, "Here’s a FEMA map that actually delivers good news for New Orleans."
To learn more about flood zone determination or any one of our cloud hosted services, please contact us. We look forward to helping you grow and protect your mortgage business.
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