![]() ![]() Zone 3a indicates an area with high risk (more than 1% chance of flooding each year).Zone 2 indicates an area with a higher risk (0.1-1% chance of flooding each year).Zone 1 indicates an area with low risk (less than 0.1% chance of flooding each year). ![]() There are four types of flood zone defined by the Environment Agency for housing planning purposes, with varying levels of severity. Flood insurance can be expensive, but there is government help available for many harder-to-insure homes. Even if you’ve had a mortgage refused due to flood risk, is it still possible to find a mortgage for a home situated in a flood zone, if you have the right insurance. Here’s more about deductions for destroyed property.Can you get a mortgage on a property in a flood zone? In the end, buyers should appreciate the risks associated with a property in a flood zone and take action to familiarize themselves with the associated costs. Buyers can also consider retaining the services of a professional such as an engineer, surveyor, or architect to make the determination. FEMA provides a flood hazard map for public use, and based on the property’s address will also provide relative risk levels for flooding. In short, neither the lender nor the lender’s vendor could be liable for their failure to correctly determine that a property was located within a flood zone.īuyers purchasing property that is even remotely located near a flood zone should exercise their own due diligence to determine whether their property will require flood insurance. In dismissing the buyer’s lawsuit, the Court noted that both federal and state courts refuse to allow either federal or state common law causes of action arising out an erroneous flood zone determination. The buyer sued his lender and the vendor that provided the initial erroneous flood zone determination. Years later when the buyer tried to refinance his mortgage, he learned that the property was in fact in a flood hazard area and the initial determination was in error. The buyer proceeded with the purchase believing the property was not located in a flood zone and that flood insurance was not required. In that case, the buyer obtained a mortgage from a lender, and as part of the process, the lender obtained a negative flood zone determination. A case out of North Carolina illustrates federal cases on this point. If forced placed insurance is necessary the lender will notify the buyer and if the buyer does not obtain insurance within 45 days, the lender will purchase a policy and bill the buyer for the premiums.īecause a lender’s duty to obtain a flood determination for purposes of flood insurance is created by federal statute, a buyer is precluded from any cause of action arising out of the lender’s flood determination. ![]() The lender may escrow flood insurance premiums along with homeowner’s insurance and property taxes.įorced placed insurance is required if the lender later determines that the house has less coverage than is necessary or no coverage at all. In accordance with federal law, if the property is determined to be in a flood zone, the lender then has to provide notice to the buyer and information on the availability of flood insurance from the government or private insurers. To comply with NFIA, lenders contract with third parties to make the flood zone determination. It requires lenders to determine whether property, that will be the subject of a mortgage loan, is located in a flood hazard area. The National Flood Insurance Act was adopted in 1968, to aid in the economic hardship from floods and to standardize flood insurance. Unfortunately, these buyers will have no recourse against their lender or its vendor the initial erroneous flood zone determination. The problem is that flood insurance premiums are expensive, and buyers argue they should have known about the expense prior to their purchase. However, if it is later determined the property is in a flood hazard area, buyers will have to pay for flood insurance. If it is not, then insurance is unnecessary. If it is, then the buyer will be required to purchase flood insurance. As part of the home buying process, lenders are required under federal law to determine whether the property is located in a flood hazard area. ![]()
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