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Old 11-13-2009, 08:19 AM
 
38 posts, read 174,406 times
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We closed on our new home this past Friday. While in the process of purchasing it, it was determined that our property was showing up on the FEMA SHFA map, requiring us to purchase flood insurance. Our attorney had a dwelling search completed, certified, and submitted to the bank to prove that although a portion of our property was indeed in the flood zone, the dwelling itself was not. Our mortgage broker then told us that the bank would not waive the option for flood insurance, so we purchased a policy at a preferred rate. The day before we were set to close, we were informed that the underwriters would not approve the mortgage unless we had purchased SHFA flood insurance!

My insurance agent was livid...but all phone calls to the bank went unheeded...they would not allow us to close without a new policy in place. We ended up purchasing a second flood insurance policy ($2300 vs $388) for the purpose of closing the loan....we could not get the original company to issue the policy, because they had independently determined that the structure is outside of the flood zone! After we closed, the insurance agent cancelled the new policy, and left the original one in place. It is for maximum coverage of both structure and contents. My question is this - as long as we have a flood policy in place, for the correct amount of coverage, why would the bank care how much it cost us? An extra $2000 per year is a lot of money!
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Old 11-13-2009, 08:28 AM
 
58,981 posts, read 46,144,950 times
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Quote:
Originally Posted by vllygrrl View Post
We closed on our new home this past Friday. While in the process of purchasing it, it was determined that our property was showing up on the FEMA SHFA map, requiring us to purchase flood insurance. Our attorney had a dwelling search completed, certified, and submitted to the bank to prove that although a portion of our property was indeed in the flood zone, the dwelling itself was not. Our mortgage broker then told us that the bank would not waive the option for flood insurance, so we purchased a policy at a preferred rate. The day before we were set to close, we were informed that the underwriters would not approve the mortgage unless we had purchased SHFA flood insurance!

My insurance agent was livid...but all phone calls to the bank went unheeded...they would not allow us to close without a new policy in place. We ended up purchasing a second flood insurance policy ($2300 vs $388) for the purpose of closing the loan....we could not get the original company to issue the policy, because they had independently determined that the structure is outside of the flood zone! After we closed, the insurance agent cancelled the new policy, and left the original one in place. It is for maximum coverage of both structure and contents. My question is this - as long as we have a flood policy in place, for the correct amount of coverage, why would the bank care how much it cost us? An extra $2000 per year is a lot of money!
The only thing I can think of is that the bank may be uncomfortable that a specific insurer would be around to pay it's claims and they don't want to be on the hook for that. However, I would think your insurance agent would only get coverage via a financially solid insurer so I doubt that's the case.

The extreme price difference is curious but not impossible.
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Old 11-13-2009, 08:59 AM
 
4,948 posts, read 17,301,137 times
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Flood insurance is covered under FEMA and I for sure would get another quote and have the maps
checked further. Where I do live the town has maps of floods zones and what level they are.
I was told they also are rewriting where flood zones are. If you do go to the Fema page they also
have maps of what flood zone you may be in. I am not in a flood zone but did opt to but the insurance
but I pay around 244.00. You can buy flood insurance from any insurance agent also since it a a gov't
insurance. Even check with other insurance agents for next year for a better rate.
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Old 11-13-2009, 09:50 AM
 
38 posts, read 174,406 times
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I guess I should clarify this a bit - according to the dwelling search we did, our house is not in the hazardous flood zone, but part of the property is. Even though FEMA regulations state that we do not need to purchase flood insurance, we opted to, figuring better safe than sorry. When it came down to closing the loan, however, the bank forced us to buy a flood insurance policy as if we were in the hazardous flood zone. For some reason, the FEMA insured policy we already were carrying would not satisfy underwriting. My feeling is that as long as we have a policy for the max amount we can carry, what should it matter what zone our insurance company has placed us in?
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Old 11-13-2009, 01:29 PM
 
108 posts, read 329,377 times
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Quote:
Originally Posted by vllygrrl View Post
I guess I should clarify this a bit - according to the dwelling search we did, our house is not in the hazardous flood zone, but part of the property is. Even though FEMA regulations state that we do not need to purchase flood insurance, we opted to, figuring better safe than sorry. When it came down to closing the loan, however, the bank forced us to buy a flood insurance policy as if we were in the hazardous flood zone. For some reason, the FEMA insured policy we already were carrying would not satisfy underwriting. My feeling is that as long as we have a policy for the max amount we can carry, what should it matter what zone our insurance company has placed us in?
so your lender is questioning the Map Zone the insurer placed on the property?
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Old 11-13-2009, 02:34 PM
 
Location: Denver, CO
3,133 posts, read 10,103,220 times
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We had the same issue, found out the house was in a flood zone before closing. Decided to go ahead with it, thought it does stress me out when selling it down the road. Funny thing is we are on a mountain and the place has never flooded in 24 years since it was built. I was quoted going through FEMA at around $2000+ a year. I found a cheaper alternative through an insurance broker for $800/year. I would love to even find a cheaper solution. But an extra $60/month for flood insurance sucks but I guess we're covered if anything would happen (whether you are on a flood plaine or not),
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Old 11-14-2009, 08:49 PM
 
58,981 posts, read 46,144,950 times
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Quote:
Originally Posted by PokerMunkee View Post
We had the same issue, found out the house was in a flood zone before closing. Decided to go ahead with it, thought it does stress me out when selling it down the road. Funny thing is we are on a mountain and the place has never flooded in 24 years since it was built. I was quoted going through FEMA at around $2000+ a year. I found a cheaper alternative through an insurance broker for $800/year. I would love to even find a cheaper solution. But an extra $60/month for flood insurance sucks but I guess we're covered if anything would happen (whether you are on a flood plaine or not),
You bring up some good points.

1) You CAN buy flood insurance from someone other than the Federal Govt. in a number of cases.

2) Heavy localized rainfall causing a mudslide is generally covered under some sort of flood policy and NOT normal homeowners insurance so even if up on a hillside its not a terrible thing to have.
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Old 11-15-2009, 09:51 AM
 
Location: MID ATLANTIC
8,206 posts, read 20,331,442 times
Reputation: 9472
Has anyone asked you to get an elevation cert? In some states, if ANY of the property is in a flood zone, there are extra steps involved. Ask anyone that lives in Florida.

You have every right to continue to shop for cheaper coverage (go w/ a high deductible) and once you get your payment book or mortgage statement, call the escrow department and request their requirements.

Many times the tail has no idea what the head is doing. I suspect that is a large part of the issue here. Our entire industry has gone into "defensive underwriting" mode and it won't change anytime soon. When you have only the US government buying Mortgage Backed Securities (MBS), no one wants to have a loan they can't sell on their shelf. So, the head (the underwriter) has covered her tail, but the tail may not really need it.
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Old 10-22-2015, 10:29 PM
 
1 posts, read 1,261 times
Reputation: 10
Can anyone recommend a cheaper flood insurance company than FEMA. Cause I'm in the process of buying a house and the Property Survey says I'm in Zone X and FEMA maps show that I'm in Flood Zone AE and the bank is requiring me to get flood insurance which I'm quoted to $2000 per year which is rediculous. Can someone please help out?
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Old 10-23-2015, 12:58 AM
 
Location: Denver, CO
3,133 posts, read 10,103,220 times
Reputation: 2473
I use this place

Just pass on the house, unless it's on the ocean or a lake...
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