Cross-Collateralization and Flood – What you need to know to stay covered.

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Question:

We are making a loan to a business customer to purchase a new apartment building. The apartment building is not located in a flood zone. The loan approval requires the cross collateralization of two additional properties owned by the borrower. Do I need to obtain flood determination on these properties?

Answer:

Yes. Properties that are cross-collateralized require a flood determination and flood insurance if the determination reveals the property is in a zone requiring flood insurance.

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Learn more about Michelle Strickland’s Flood Compliance for Commercial Lenders webinar.