Situation: Borrower refinancing homestead and adding new money. The dwelling is in a special flood hazard area. The flood insurance currently in place is not sufficient and was not noticed until just now. Loan scheduled to close soon. We have the endorsement that the flood insurance coverage will be at a level that is adequate however, there is a cost to increasing the coverage. Can this cost be paid outside of closing? Must it be disclosed on the CloD. If so...how?

It would be disclosed as a prepaid for the remainder of the term of the policy.

For the original amount or with the increase? They can pay this outside of closing with no detriment correct?

Just for the increase. If they pay it outside of closing, you would show it as such on the CD as it is a requirement to obtain the loan.

Thank you!