Now that the new Q&As from October are sinking in, I'm wondering if anyone is making policy changes to address Q&A #9 that pertains to "insurable value"?

Our policy has allowed lenders to use the hazard insurance building coverage amount to determine the "insurable value" for flood insurance. However, now that Q&A #9 includes a caveat about the foundation, I'm trying to determine a good policy for lenders to consistently adjust for foundation repairs/replacement.

Has anyone tackled this? If so, how are you arriving at a reasonable cost for the foundation?

I am currently in the process of tackling this issue. It is not pretty. To get a cost-value approach factored in to each appraisal looks to add about $175 to the cost of the appraisal. Hazard insurance providers are under no compulsion to come up with a foundation value for us, and trying to get them to do so will likely met with a dead end or at least dealy closing considerably. Construction-cost caluclation has similar issues as getting cost-value. "Any other reasonable approach" means God knows what...tax assessments are no good...what else is there. Once again our wonderful friends at FEMA have switched horses in mid-stream, and it is the consumer who will bear the higher cost of credit.

"To get a cost-value approach factored in to each appraisal looks to add about $175 to the cost of the appraisal."

That is why it is important to order your FHD prior to ordering your appraisals. If it in the flood zone, then you instruct the appraiser to not exclude the cost approach. You don't have to get it on every one if they are not in a flood zone and circumstances allow the appraiser to either exclude the cost approach or invoke the departure rule.