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Started By
Message
re: Flood Insurance Loophole
Posted on 5/17/11 at 9:45 am to LSU Tigerhead
Posted on 5/17/11 at 9:45 am to LSU Tigerhead
You can waive the 30-day waiting period with any loan requirement. If you get a $5,000 HELOC and they require that your home be insured against flood, the waiting period can be waived.
1
Posted on 5/17/11 at 10:00 am to Slickback
As long as its a NEW loan, the 30 day wait does not apply.
Posted on 5/17/11 at 10:31 am to missloutiger
quote:
The credit check takes 5 min and most banks have an appraiser on staff so most small town banks are cranking them out pretty quick.
Then you have to go through lawyers to see if the property is free and clear. This doesn't happen quickly. Most people who are doing this already have a mortgage at the bank or have had one at the bank previously and fairly recently.
Posted on 5/17/11 at 10:57 am to Chad504boy
I am still confused on this..
I was told differing information yesterday by one of our flood underwriters, and I generally trust her on all things flood.
Undoubtedly, this will turn into a clusterfrick if there is any flooding in any unexpected areas in LA.
I was told differing information yesterday by one of our flood underwriters, and I generally trust her on all things flood.
Undoubtedly, this will turn into a clusterfrick if there is any flooding in any unexpected areas in LA.
Posted on 5/17/11 at 11:01 am to Meatloaf
quote:
I was told differing information yesterday by one of our flood underwriters, and I generally trust her on all things flood.
About what exactly?
Posted on 5/17/11 at 11:06 am to Chad504boy
I'll lay it out:
Scenario 1 - closing this week, house in Metairie, obviously in a flood zone.
Scenario 2 - closing this week, house in Zachary, not in a flood zone.
I was told to tell #1 that she will of course have immediate coverage due to her closing/loan and the fact that she is in a flood zone.
She said to tell #2 that he would have coverage with the 30 day wait - even though he has a closing/loan as well.
She wanted us to "cover our asses" when it comes to telling anyone involved in a closing/loan that they will have immediate coverage due to the fact that this is a "Loss in Progress"...
Know anything about this "Loss in Progress" rule? This is the first I have heard of it really..
Scenario 1 - closing this week, house in Metairie, obviously in a flood zone.
Scenario 2 - closing this week, house in Zachary, not in a flood zone.
I was told to tell #1 that she will of course have immediate coverage due to her closing/loan and the fact that she is in a flood zone.
She said to tell #2 that he would have coverage with the 30 day wait - even though he has a closing/loan as well.
She wanted us to "cover our asses" when it comes to telling anyone involved in a closing/loan that they will have immediate coverage due to the fact that this is a "Loss in Progress"...
Know anything about this "Loss in Progress" rule? This is the first I have heard of it really..
Posted on 5/17/11 at 11:09 am to Meatloaf
quote:
Scenario 2 - closing this week, house in Zachary, not in a flood zone.
But is lender requiring it or not? You may not be in flood zone but still lender required.
quote:
She wanted us to "cover our asses" when it comes to telling anyone involved in a closing/loan that they will have immediate coverage due to the fact that this is a "Loss in Progress"...
How the hell is that covering your arse by telling someone they WOULD have coverage when you aren't sure, sounds like the oppo of covering your arse, more like sticking a foot up your arse.
Posted on 5/17/11 at 11:12 am to Chad504boy
#2 is not required to have flood insurance.
And exactly..I'm more confused than I was before.
She said that they would evaluate any losses on a case by case basis. If they are using this "loan loophole" as a way to purchase flood and have immediate coverage, and a loss were to occur - the homeowner would have to prove that they NEEDED the flood insurance. So in turn, they would have to be in the flood zone and have it be required in terms of that loan. Right?
ETA: this is what she copied and pasted from the new email FEMA was passing out..
If the policy was purchased recently, then the adjuster should document the amount of the loan and the purpose for which it was obtained. Also to be documented would be the date on which flooding commenced within the geographical community where the insured property is situated, and the date on which damage to the insured property actually occurred. Thereafter, decisions upon whether the claim is payable will be made on an individual basis, but in accordance with both the terms of the SFIP and the United States Appellate Court decisions discussed later within this memorandum.
And exactly..I'm more confused than I was before.
She said that they would evaluate any losses on a case by case basis. If they are using this "loan loophole" as a way to purchase flood and have immediate coverage, and a loss were to occur - the homeowner would have to prove that they NEEDED the flood insurance. So in turn, they would have to be in the flood zone and have it be required in terms of that loan. Right?
ETA: this is what she copied and pasted from the new email FEMA was passing out..
If the policy was purchased recently, then the adjuster should document the amount of the loan and the purpose for which it was obtained. Also to be documented would be the date on which flooding commenced within the geographical community where the insured property is situated, and the date on which damage to the insured property actually occurred. Thereafter, decisions upon whether the claim is payable will be made on an individual basis, but in accordance with both the terms of the SFIP and the United States Appellate Court decisions discussed later within this memorandum.
This post was edited on 5/17/11 at 11:13 am
Posted on 5/17/11 at 11:17 am to Meatloaf
quote:
and the date on which damage to the insured property actually occurred. Thereafter, decisions upon whether the claim is payable will be made on an individual basis,
I take that as meaning making sure the flood occurred after policy was purchased... (given no 30 day wait) but they can't just go make individual decisions for random reasons and say you covered and you not for shits and giggles. They can "document" whatever they want but doesn't give it the means to affect a legal decision.
Posted on 5/17/11 at 11:21 am to Chad504boy
I'm going to call her back today with the Boss and have her go into greater detail.
Posted on 5/17/11 at 11:21 am to Chad504boy
According to FEMA:
MYTH: You can?t buy flood insurance immediately before or during a flood.
FACT: You can purchase flood coverage at any time. There is a 30-day waiting period after you?ve applied and paid the premium before the policy is effective, with the following exceptions:
* If the initial purchase of flood insurance is in connection with the making, increasing, extending or renewing of a loan, there is no waiting period. The coverage becomes effective at the time of the loan, provided application and presentment of premium is made at or prior to loan closing.
* If the initial purchase of flood insurance is made during the one-year period following the adoption of a revised Flood Insurance Rate Map for a community, the waiting period is only one day.
The policy does not cover a ?loss in progress? defined by the NFIP as a loss occurring as of 12:01 a.m. on the first day of the policy term. In addition, the amount of insurance coverage cannot be increased during a loss in progress.
MYTH: You can?t buy flood insurance immediately before or during a flood.
FACT: You can purchase flood coverage at any time. There is a 30-day waiting period after you?ve applied and paid the premium before the policy is effective, with the following exceptions:
* If the initial purchase of flood insurance is in connection with the making, increasing, extending or renewing of a loan, there is no waiting period. The coverage becomes effective at the time of the loan, provided application and presentment of premium is made at or prior to loan closing.
* If the initial purchase of flood insurance is made during the one-year period following the adoption of a revised Flood Insurance Rate Map for a community, the waiting period is only one day.
The policy does not cover a ?loss in progress? defined by the NFIP as a loss occurring as of 12:01 a.m. on the first day of the policy term. In addition, the amount of insurance coverage cannot be increased during a loss in progress.
Posted on 5/17/11 at 11:23 am to JudgeHolden
So I think you had to get your coverage in place just before the water hit your camp. Most people were doing it last week. If you are already underwater, then you are already SOL.
Also, I am told that you can only do this if you actually own the land. If you have built a camp on a leasehold, you are SOL. Don't know if that is true or not, but that is what I heard.
Also, I am told that you can only do this if you actually own the land. If you have built a camp on a leasehold, you are SOL. Don't know if that is true or not, but that is what I heard.
Posted on 5/17/11 at 11:44 am to JudgeHolden
To further what you posted:
(From one of our flood websites..)
How long will I have to wait until my flood insurance policy goes into effect?
Normally, there is a 30-day waiting period. However, if the initial purchase of flood insurance is in connection with the making, increasing, extending or renewing of a loan, there is no waiting period. Have your lender issue a letter stating that flood insurance is required and your insurance agent will waive the 30-day waiting period.
If the loss meets the definition of a flood, how do I make sure my claim will be paid?
When your flood insurance policy is issued, make sure your agent received your flood insurance premium and waived the 30-day waiting period, if the insurance was “lender-required.” It is very important to keep in contact with your insurance company.
I think the key to this "loophole" is if the the policy is "lender required"...which I would say not all flood policies in this loophole will be.
(From one of our flood websites..)
How long will I have to wait until my flood insurance policy goes into effect?
Normally, there is a 30-day waiting period. However, if the initial purchase of flood insurance is in connection with the making, increasing, extending or renewing of a loan, there is no waiting period. Have your lender issue a letter stating that flood insurance is required and your insurance agent will waive the 30-day waiting period.
If the loss meets the definition of a flood, how do I make sure my claim will be paid?
When your flood insurance policy is issued, make sure your agent received your flood insurance premium and waived the 30-day waiting period, if the insurance was “lender-required.” It is very important to keep in contact with your insurance company.
I think the key to this "loophole" is if the the policy is "lender required"...which I would say not all flood policies in this loophole will be.
Posted on 5/17/11 at 4:25 pm to LSU Tigerhead
I just built a new house. I had sold a house last year and made a great profit even after 16 months. I needed about $20,000 to finish the new one and opened a line of credit. Paid it down to about $17,000 since January. House cost around $220K to build. Flooding becomes an issue. Bank tells me they can do another loan similar to a line of credit with a mortgage and i can get flood insurance. Under $25,000, bank is waving all appraisals and fees. I can get the loan this week and flood ins. according to my agent. Not in a flood zone but live on a lake within sight of Bayou Macon in NELa. For $365 a year I believe I will do it.
Posted on 5/17/11 at 7:48 pm to LSUCouyon
quote:
Scenario 2 - closing this week, house in Zachary, not in a flood zone.
You could get the flood coverage immediately. The requirement is a loan closing, it has nothing to do with which flood zone you are in.
Just wanted to let you know that your banker is full of shite. By the way I am not guessing I sell commercial insurance for a living.
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