Flood Insurance ?

[bigdog]

Does any Forum member have any experience about 'flood insurance'.

I have entered into a purchase agreement for a condo located at Lake Winnie. After spending countless hours providing my mortgage lender with every piece of information about myself since birth, they are now telling me that the property has been determined to be in a FEMA determined 'flood zone'. Supposedly, there is a 1% chance to experience a flood in the property area, within a 100 yr period ! I could possibly see if the condo maybe was waterfront, but the condo location is about 1/4 mile away from the water, sitting in an area that is nice and dry Do you believe this ! Your Federal tax dollars at waste.

As a stipulation to secure the mortgage, my bank is telling me I need to purchase 'flood insurance', otherwise 'no loan' ! This would be an annual insurance premium, for the term of the mortgage, 30 years ! They are nuts !
Is this a common requirement for most banks and/or mortgage companies,
or did I just pick a lucky one out of the bunch! FYI, The Bank is one of the largest banks in the country.

The property is located in a land-lock area. Located about 1/4 mile from the Lake. The condo complex does not have 'flood insurance' to cover 'any' units,
only the Master Insurance policy coverage.

I would think if the property area was considered in a FEMA flood-zone,
the entire complex would have to be covered, as part of a master insurance plan to cover all owners? Not the case! They have none !

Anyone ever have to deal with 'flood insurance' before with your mortgage lender ? What type of annual premiums are we talking about here ?

Any information will be greatly appreciated !

Bigdog

[Resident 2B]

Bigdog,

Since FEMA has the call on who can and who cannot purchase flood insurance, coupled with the requirement most banks have to qualify for FANNIE/MAE support, if FEMA says you need to purchase flood insurance and if you need a mortgage to close the deal, you have to buy the insurance.

The only alternative I am aware of is going to a private mortgage lender, but they will likely have a higher interest rate, most likely higher than the going non-private rate plus the flood insurance premium.

Sorry to hear of your situation, but that is the way the FEMA flood protection goes in the post-banking-meltdown days. A local bank might have a better deal, but I doubt it.

Good Luck in whatever you do,

R2B

[bigdog]

Do you think all major banks perform this due-dilgence regarding researching if a property falls into a FEMA flood-zone, and require flood insurance?

I can see the mega banks: Citicorp, BOA, TD-Bank performing such review,
but the little Mom & Pop banks like Laconai SB, Meredith Villiage, Profile Bank, etc. I wouldn't think these type of financial institutions, would have the time or resources to perform such a review? Or make it a mandatory requirement.

Thoughts?

Bigdog

[Resident 2B]

BD,

The smaller, local banks know the area much better than the big banks. They also are run by knowledgeable people with local knowledge. They are more inclined to bend the rules, but the rules are now very tight due to the "meltdown".

Another option is to go back to the current owners and let them know of the situation. It is their problem right now, since you have not yet purchased the property. They might be willing to reduce the price a bit more. However, if you close on this property, you will now own the problem and it will bite you again when you sell.

Good luck in whatever you decide!

R2B

[Argie's Wife]

Been through this and posted about it on another thread.

Let me share the details here so that others can benefit from our experience:

1) FEMA maps are OLD... you can view them yourself HERE. The newest ones are on line are from 1988. Since you didn't mention (or I didn't catch it) where you were buying, you can look this up and see for yourself.

2) You can dispute the bank's findings. Ask if there is a formal process for this and disclose that you have found no other units in the complex have flood insurance. (In our case, it was that an insurance underwriter in Idaho was misreading a FEMA map. No joke.) It's likely there's a time limit for this sort of thing. Going to another bank may not solve the problem. This seems to be common lately. In our case, we had another survey and the findings were share with all parties. We pushed hard for everyone to communicate and ON TIME - no delays. (I'm a good ankle nipper when I have to be.) We resolved it at that point - it went no further for us but still cost $400 more than we'd planned.

3) Be willing to get a new survey of your property. This may cost money.

4) Be willing to get a lawyer. We all know this WILL cost money. (I know a couple of good ones that are experienced w/ this sorta thing. PM me if you want names.) (We didn't have go that far - thank God. One of our two neighbors did and they won.)

5) Go to the town planner and talk with them about your case. They may be your best resource for not just maps but maybe even other similar cases.

6) Can you ask your future neighbors for help? We ended up giving a copy of our certificate from the last survey we had done to two of our neighbors when they had the SAME problem. BOTH got out of having to pay flood insurance. It might be worth the try - maybe someone in that complex has already dealt with this problem.

Keep cool. Document everything (and I mean EVERYTHING.)

This isn't impossible to get past - I don't envy you having to go thru it.

In our case, we found out about the "need" for flood insurance and responded with "what do we have to do to make this go away!" We were closing in 3 weeks and expecting our first baby in 9 weeks. (Little did we know that baby would come in 3 weeks - just a couple of days after closing.)

Good luck!

[upthesaukee]

then yes, ya gotta get it, unless you can prove to them that the property is not in the 100 year flood plain. You may not think you are in a flood plain because you are not that close to the lake, but it may not be the lake. It can be rivers and streams, small ponds with streams, etc.

We lived in Bossier City LA and our realtor told us up front we would have to get flood insurance, so when we went to our Insurance agent, we told him what we needed. He looked it up, and we did not need it. We had a corner lot, and our house was the only one of four lots that did not need it. In fact our whole block, about 20 houses did not need it, because our lots were literally about 2-3 feet higher than the lots across the street, and that was all it took. We actually had some terrific rains, and had water come half way up our driveway, while the neighbors across the street had water lapping at their doors.

Bottom line, if you're told you need it, then get it. Also know how much you will need to satisfy the mortgage company, and how much you will need to cover your contents, because your normal HO policy will not cover any flood damage.

I understand your frustration, and with your hands in your pocket, I would ask the realtor what's up with not being told. Don't know if you had an estate lawyer involved, but he/she may have caught that early enough for you to get out of the P&S.

[Argie's Wife]

For the record - our house is on a big hill and was one of the houses hit when the dam broke in Alton in 1997. There was no way we were close to needing flood insurance. *I* could tell from the FEMA map we didn't need it. It wasn't exactly hard to determine but since I'm not a surveyor, my opinion didn't mean squat.

By the way - this might be of interest to you from FEMA's website:

3. If I disagree with my lender's determination that I am in a Special Flood Hazard Area (SFHA), what can I do?

In some cases, a lender determines that a property is in a SFHA shown on a Flood Insurance Rate Map (FIRM) but the property owner disagrees with that determination. The SFHA is also known as the 100-year floodplain. It is more precisely defined as the floodplain associated with a flood that has a 1-percent-annual chance of being equaled or exceeded in any given year. Therefore the SFHA is not a flood event that happens once in a hundred years, rather a flood event that has a one percent chance of occurring every year. Property owners in this situation have a couple of options. Depending on the specific circumstances, you may apply for a Letter of Determination Review (LODR), a Letter of Map Amendment (LOMA), or a Letter of Map Revision Based on Fill (LOMR-F).

The application forms for LOMAs and LOMR-Fs can be found on the FEMA Forms Webpage and provide comprehensive, step-by-step instructions for requesters to follow ensuring that your submittal is complete and logically structured. Use of these forms allows FEMA to complete its review quicker and at lower cost to the National Flood Insurance Program. While completing the forms may seem burdensome, the advantages to you outweigh any inconvenience. The following paragraphs describe first the LOMA or LOMR-F process, followed by the LODR process.

Upon receiving a completed MT-EZ (for LOMAs) or MT-1 (for LOMR-Fs) application, FEMA reviews property-specific information (including surveyed elevation data, typically the elevation of the lowest adjacent grade of the structure in question, provided by a Licensed Land Surveyor Note: the homeowner may be required to hire a land surveyor to perform this elevation survey, if this data is not readily available), and makes a final flood zone determination for the property. Once an application and all necessary data are received, the determination is normally issued within 30 - 60 days. If the LOMA or LOMR-F removes the SFHA designation from the property, it can then be presented to the lender as proof that there is no Federal flood insurance requirement for the property. However, even though a LOMA or LOMR-F may waive the Federal requirement for flood insurance, a lender retains the prerogative to require flood insurance. No fee is charged for the review of a LOMA; however, there is a review fee for a LOMR-F. Check the flood map-related fees on the Flood Hazard Mapping Website.

Within 45 days following the date your lender notified you that your property is in the SFHA shown on the FIRM for your community, you and your lender may jointly request that FEMA review your lender's determination; FEMA's response to such requests is a LODR. In response to such requests, FEMA reviews the same information your lender used to determine that your structure was located in an SFHA. Unlike with a LOMA or LOMR-F, the elevation of the structure or property relative to the elevation of the 1-percent-annual-chance flood is not considered for a LODR. Just like your lender, FEMA only considers the location of the structure relative to the SFHA boundary shown on the FIRM. FEMA reviews this information and issues its finding of whether the structure is located in the SFHA according to the currently effective FIRM. While this determination cannot consider the elevation of your structure or property, it can be useful if you feel the lender's interpretation of the FIRM is incorrect.

There are obviously some important distinctions between the processes (LODR, LOMA, and LOMR-F).

The determinations are based on different data.
The LODR process does not consider the elevation of the structure or property. Rather, it considers only the horizontal location of the structure relative to the SFHA shown on the FIRM. For the LOMA and LOMR-F processes, actual survey elevation data are required to determine if the property or structure is at or above the 1-percent-annual-chance flood elevation.
There are different review and processing fees involved.
PROCESS FEE
LOMA FREE
LODR $ 80
LOMR-F $425
The determinations result in different actions.
A LODR does not result in an amendment or revision to the FIRM. It only presents the FEMA finding regarding the structure's location with respect to a delineated SFHA.
An approved LOMA or LOMR-F actually removes the SFHA designation from the structure or lot by letter.

SOURCE HERE: http://www.fema.gov/plan/prevent/fhm/fq_genhm.shtm#hm3

[Argie's Wife]

Originally Posted by bigdog

Do you think all major banks perform this due-dilgence regarding researching if a property falls into a FEMA flood-zone, and require flood insurance?

I can see the mega banks: Citicorp, BOA, TD-Bank performing such review,
but the little Mom & Pop banks like Laconai SB, Meredith Villiage, Profile Bank, etc. I wouldn't think these type of financial institutions, would have the time or resources to perform such a review? Or make it a mandatory requirement.

Thoughts?

Bigdog

My experience is most of the little banks SELL mortgages once you've signed the bottom line. It might be right away or it might be months or years but expect that could happen to you. We got our mortgage through Citizens Bank and it ended up with Country Wide, who then sold to Bank of America.

It's also my experience, just from what my neighbors went through, that ANY lender can come up with this "need". You are welcome to dispute it. At least by doing so you will have put to rest any doubts you may have as to whether the lender's findings are correct. They are trying to protect THEIR investment - your house - until you have paid it off, at least.

[bigdog]

Thanks all, but I am up against time limitations, for various reasons, too much to discuss here..... Direction to be taken is still undecided....

BTW UPTHESAUKEE, I did use a local R.E. attorney to review the P & S, A very good and recommended attorney, from this Forum. He said nothing about 'flood insurance' or any concerns about this?

Bigdog

[tis]

We used to carry flood insurance on a house in Maine. When we had a mortgage it was required, but going to two different insurance companies, they did read the flood plain map differently so we got a better deal on the second one. The second one was local to Maine. We carried it for many years after the mortgage was paid off but about 5 years ago decided to drop it. It was costing about $1100 then.

[LIforrelaxin]

Big Dog,

As other have said if the Bank deems you to be in the flood plain and you are not able to prove to them that it is not a concern then you are going to have to get the flood insurance.

Now not knowing how your P&S is set up there are two things:
-- you should have a clause about securing a mortgage, and if you can't secure it then that will let you out of the P&S.. When I bought a condo a year ago, my P&S had a clause that let me get the security deposit and everything back if I couldn't secure my mortgage. I almost had to enact this when I couldn't get specific needed documents from the Condo Association. As long as you prove it is either because of something that wasn't disclosed to you, as seems the case her, or through no fault of you own
.
-- if you really want the place, I would ask for an extension. In this market I would think the current owners would be willing to give you more time, as long as they know your serious and about the problem you are trying to deal with.

[DickR]

When we moved upshore from where we were back in 1992, the bank at first wanted us to have flood insurance. I told them "huh?" and asked why. It seems some paper pusher noted the proximity to water, with a structure right at the shore line. I explained that it was called a "boathouse" and by definition had water really close by, like in it's "basement," at all times. Further, I added that the cottage was so far up on the land above water level that we'd be loading pairs of animals onto arks, or at least most of Laconia would be under water, before the cottage would be affected. They took off the flood insurance requirement.

If the OP's house really is not susceptible to flooding from anywhere (lake, streams, dam bursting), he ought to push to have the bank look close up, and not at just some map FEMA puts out.

[Argie's Wife]

...the bank isn't always right, as DickR also experienced...

I'm glad we disputed it and I'm glad my neighbors did too. It would have been a waste of money.

[jmen24]

Bigdog, as you obviously know "most" condo ownership rights are from the exterior framing in, (windows, siding, decks, roofing, building frame and foundations all owned by the association, and require approval to renovate). If you have flood insurance on the interior but the condo association does not have flood insurance on the exterior, what are you really insuring. If the building gets damaged in a flood and the association's insurance company will not pay to repair or replace their portion, will the association pick up the tab and rebuild, or do you get a check and told to walk along your merry way. Having money to rebuild the interior of a building that won't have an exterior seems odd to me. I would think that the bank would require the association to have some type of flood policy as well or whats the point.

I am with AW on this, fight hard, if they won't budge then how bad do you really want it.

[Shedwannabe]

I was in Iowa and looked at the flood maps - we were just a few inches above the 500 year flood plane. In 1993 our house was NOT under water.... but many who were in the 500 year flood plane were, and everyone in the 100 year flood plane. A year and a half ago (having sold our home before then) our house was surrounded by water, but it didn't actually come into the house. Everyone in the 500 year flood plane was flooded, and of course everyone in the 100 year flood plane was wiped out (many have not rebuilt their homes, just tore them down). Interestingly, our neighbors on the UPHILL side of us had $30,000 in flood damage... because they had a basement. I think our old house might have been the only one in the entire development that didn't sustain flood damage. However, the yard was totally wrecked from being underwater for two months.

[Rattlesnake Guy]

Does anyone know how high the lake would get with the 100 year flood?

[secondcurve]

Folks:

Be careful about fighting flood insurance. It is there for a reason. As someone noted above, if your home is flooded you won't be covered by a normal homeowners policy and could be on the hook for repairs and they an be significant. I have a friend who similarly fought the requirement to have flood insurance on a property he bought because he didn't think it was needed. Well, he was forced to take the insurance and 4-years after doing so a nearby river flooded and caused $60,000 worth of damage. Guess what? He was glad he had the insurance.

[Argie's Wife]

Originally Posted by secondcurve

Folks:

Be careful about fighting flood insurance. It is there for a reason. As someone noted above, if your home is flooded you won't be covered by a normal homeowners policy and could be on the hook for repairs and they an be significant. I have a friend who similarly fought the requirement to have flood insurance on a property he bought because he didn't think it was needed. Well, he was forced to take the insurance and 4-years after doing so a nearby river flooded and caused $60,000 worth of damage. Guess what? He was glad he had the insurance.

If a surveyor finds that you are truly in a Flood Zone, there's nothing further you can do to fight it. You're forced, like secondcurve's friend to take it. If a bean counter at a desk in Iowa is saying you're in a Flood Zone, then no and your review of the FEMA maps, even as a lay-person, show that you aren't - then fight it.

The point of what I've shared is: put to rest any doubt that you NEED it before you sign.

[Merrymeeting]

Originally Posted by Rattlesnake Guy

Does anyone know how high the lake would get with the 100 year flood?

We all do. We had several 100-year storms in May of 2006.

The lakes were as high then as I've ever seen them. If Merrymeeting had gone another foot or less higher, the dam would have overflowed and dumped into Alton. Granted, I suppose that could happen. But I can't imagine a year with much more rain than we had that year, certainly not for insurance table planning purposes!

[Resident 2B]

Originally Posted by Rattlesnake Guy

Does anyone know how high the lake would get with the 100 year flood?

I did a little research on your interesting question. According to FEMA maps, the lake is rated A2 506. As I understand it, this code means a 100 year flood will have the lake at 506'.

I checked this against Bizer's lake level chart and found that the highest lake level on the Bizer chart was in 1984 at about 505.85' Full pool for the lake is 504.32'

FEMA considers all flood controls impacting the specific areas, so they must be considering the Lakeport Dam. The bigger impacts from a 100 year flood seem to be down stream.

R2B

[Merrymeeting]

I also did a bit of research and thought others might be interested in what I found.

Here's a general view of what a 100-year flood means.
http://ga.water.usgs.gov/edu/100yearflood.html

This is an interesting, recent report on flooding in NH that includes data from the May 2006 storms that I mentioned earlier. One of the more interesting extracts,

"in mid-May 2006, 8 to12 inches of continuous heavy rain over a three-day period caused the worst flooding in New Hampshire since the hurricane of 1938 (NOAA National Climatic Data Center). USGS reported the highest ever flows recorded on 12 rivers in central and southern New Hampshire; six were higher than the predicted 100-year flood. A reported 600 roads were closed, hundreds of families had to evacuate, and dozens of homes were lost."

The full report here, http://des.nh.gov/organization/divis...t_chpt_2.7.pdf

Finally, another recent and detailed report on flood plains in NH.
http://pubs.usgs.gov/sir/2008/5206/pdf/sir2008-5206.pdf


My argument to the bank would be if it didn't flood in 2006, it won't now!

[tis]

Originally Posted by Resident 2B

I did a little research on your interesting question. According to FEMA maps, the lake is rated A2 506. As I understand it, this code means a 100 year flood will have the lake at 506'.

I checked this against Bizer's lake level chart and found that the highest lake level on the Bizer chart was in 1984 at about 505.85' Full pool for the lake is 504.32'

FEMA considers all flood controls impacting the specific areas, so they must be considering the Lakeport Dam. The bigger impacts from a 100 year flood seem to be down stream.

R2B

That 1984 was the highest water I have ever seen. Lots of places were flooded then and I remember them calling it a hundred year flood. However, I thought I remembered a flood after that being called a hundred year storm too. (Maybe the first not wake flood?) But the highest I remember in our yard was 1984.

[onthebay]

I had the same issue when my mortgage was sold to another bank. The original mortgage company didn't require it. The new company said that it was required as a condition of the mortgage.
Since I figured I already had a mortgage with them and it seemed like they were changing the rules after the fact I more or less ignored them. Big mistake. They signed me up for their flood insurance at about $2500.00 per year. Since they included in the mortgage I would be in default if I didn't pay it. I was able to get cheaper flood insurance through my agent for half the price which was still twice as much as my regular homeowner policy.


I have shoreline on Pickerel cove but am about 20 feet higher in elevation. The elevation change on the Paugus bay side is even greater.
I wasn't in a floodzone but I was abutting a floodzone. Well the floodzone was the lake. Try telling that to a rep in the midwest who doesn't have a clue. Anyway it was a long process and fight but eventualy it was dropped as a requirement.

You may want to get a policy now to get the mortgage and fight it later. I was able to get some of the premium back when it was determined it wasn't needed.

[upnorth]

I had the same situation and couldn't fight it in time for the closing. But, I believe the bank is required to remove the flood insurance requirment if you later prove that you are not in a flood zone.

So, what I did -- I closed by purchasing the insurance for the first year at about $900. During that year, I found out that each and every property around any lake or river is automatically in a flood zone -- the FEMA guy I called in Washington told me that they basically take a yellow hightlighter around any waterway and deem that area to be a flood zone -- the width of the yellow highter translates into a zone of about 200 feet back from the water. They have no clue from the maps how fast the rise is back from the lake and that's where a surveyor comes in. I hired Associated Surveyors at a cost of I believe about $1500 and had my property surveyed. They confirmed that the foundation was not in a flood zone. I used his stamped drawings and affidavit and submitted it all to FEMA and got a waiver. I brought that waiver to the attention of the bank and they withdrew the requirement. Granted -- it cost me the first year's premium, the survey and some time, but I eleiminted the requirement over the full lenght of the mortgage (30 yrs). Perhaps I'm too late for you, but if you PM me, I can talk with you on the phone.

[robmac]

The condo insurance would cover the structure for flood damage your insurance would cover inside damage. BD,you can also pull a claim history on the property,I actually got one on a property from the agent that handles all my other policies.

[bigdog]

FYI, the Condo complex Master Insurance policy on the property,
'DOES NOT' contain flood insurance.

Will let you know how things play out......

Bigdog