Using Existing Flood Determinations for New Loan

68. May a lender rely on a previousdetermination for a refinancing orassumption of a loan or multiple loansto the same borrower secured by thesame property?

Answer: It depends. Section 528 of theAct, 42 U.S.C. 4104b(e), permits alender to rely on a previous flooddetermination using the SFHDF when itis increasing, extending, renewing, orpurchasing a loan secured by a buildingor a mobile home. Under the Act, the"making" of a loan is not listed as apermissible event that permits a lenderto rely on a previous determination.When the loan involves a refinancing orassumption by the same lender whoobtained the original flooddetermination on the same property, thelender may rely on the previousdetermination only if the originaldetermination was made not more thanseven years before the date of thetransaction, the basis for thedetermination was set forth on theSFHDF, and there were no maprevisions or updates affecting thesecurity property since the originaldetermination was made. A loanrefinancing or assumption made by alender different from the one whoobtained the original determinationconstitutes a new loan, therebyrequiring a new determination. Further,if the same lender makes multiple loansto the same borrower secured by thesame improved real estate, the lendermay rely on its previous determinationif the original determination was madenot more than seven years before thedate of the transaction, the basis for thedetermination was set forth on theSFHDF, and there were no maprevisions or updates affecting thesecurity property since the originaldetermination was made.

First published on BankersOnline.com 7/1/13