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Flood Insurance Loophole
Posted on 5/16/11 at 6:56 pm
Posted on 5/16/11 at 6:56 pm
Normally when someone buys flood insurance there is a 30 day waiting period before it goes into effect.
However there is a loophole in the law that enables the insurance to take effect immediately. If you buy flood insurance in conjunction with a home loan, then coverage is immediate.
I learned this last week and was surprised but the insurance agent who told me said they've gone through lawyers and it has definitely been confirmed by the NFIP that the loophole is indeed there.
I don't know the specifics, but only know that it has to be purchased along with a home loan. I don't know if the home loan is any type of home loan where the house is put up for collateral or if it's only if a house is purchased, or what exactly instigates the "effective immediately" policy.
Nevertheless, it's something to look into if you don't have flood insurance and want it now.
ETA: Found this nugget on YouTube
However there is a loophole in the law that enables the insurance to take effect immediately. If you buy flood insurance in conjunction with a home loan, then coverage is immediate.
I learned this last week and was surprised but the insurance agent who told me said they've gone through lawyers and it has definitely been confirmed by the NFIP that the loophole is indeed there.
I don't know the specifics, but only know that it has to be purchased along with a home loan. I don't know if the home loan is any type of home loan where the house is put up for collateral or if it's only if a house is purchased, or what exactly instigates the "effective immediately" policy.
Nevertheless, it's something to look into if you don't have flood insurance and want it now.
ETA: Found this nugget on YouTube
This post was edited on 5/16/11 at 7:00 pm
7
Posted on 5/16/11 at 6:59 pm to LSU Tigerhead
This is also appliable to refinancing your existing mortgage, fwiw.
Posted on 5/16/11 at 7:08 pm to 4LSU2
This is indeed true I work at a bank in vidalia and I put in 60 hours last week and its not looking like it will slow down this week either.
This post was edited on 5/16/11 at 7:19 pm
Posted on 5/16/11 at 7:16 pm to LSU Tigerhead
great...
another way to waste tax dollars
another way to waste tax dollars
Posted on 5/16/11 at 7:20 pm to Ford Frenzy
It really isn't a loophole.
Posted on 5/16/11 at 7:35 pm to hobo with a rolex
Not a loophole- specifically provided for in the NFIP.
Posted on 5/16/11 at 7:39 pm to LSU Tigerhead
quote:I would like to know more about the specs if anyone knows.
However there is a loophole in the law that enables the insurance to take effect immediately. If you buy flood insurance in conjunction with a home loan, then coverage is immediate.
I don't know the specifics, but only know that it has to be purchased along with a home loan. I don't know if the home loan is any type of home loan where the house is put up for collateral or if it's only if a house is purchased, or what exactly instigates the "effective immediately" policy.
Posted on 5/16/11 at 8:03 pm to Geauxtiga
The bank just has to have a loan against the property it can be equity such as a line of credit or just a mortgage, any amount. Most people are just getting the loan for the amount of the insurance premium we are doing them up to $3000. Unless the customer is refinancing there 1st mortgage.
Posted on 5/16/11 at 8:06 pm to LSU Tigerhead
My husband actually told me something about this yesterday and I looked at him like he was crazy. Very strange
Posted on 5/16/11 at 8:09 pm to SpicyStacy
The requirement is a loan closing. Any loan that involves the home, refi, HELOC, or permanent financing.
Or the mandatory 30 day wait applies.
Or the mandatory 30 day wait applies.
Posted on 5/16/11 at 8:17 pm to hobo with a rolex
quote:
The requirement is a loan closing. Any loan that involves the home, refi, HELOC, or permanent financing.
Or the mandatory 30 day wait applies.
This
Posted on 5/16/11 at 8:25 pm to LSU Tigerhead
quote:
However there is a loophole in the law that enables the insurance to take effect immediately. If you buy flood insurance in conjunction with a home loan, then coverage is immediate.
That is true. BUT, the lender must also get an appraisal, run a credit check, etc., because without it bank examiners will come down on him like a ton of bricks. All those things simply are not going to happen overnight.
The loophole does technically exist, but good luck to anyone who needs or wants to use it.
Posted on 5/16/11 at 8:26 pm to missloutiger
I know lots of people that have high dollar hunting camps behind the levee in nela that went and took out mortgages ahead of the flood in order to get flood insurance.
Posted on 5/16/11 at 8:32 pm to El Josey Wales
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.
Posted on 5/16/11 at 8:33 pm 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.
Happy to hear that.
Posted on 5/16/11 at 8:47 pm to missloutiger
quote:Thank you.
The bank just has to have a loan against the property it can be equity such as a line of credit or just a mortgage, any amount. Most people are just getting the loan for the amount of the insurance premium we are doing them up to $3000. Unless the customer is refinancing there 1st mortgage.
Posted on 5/16/11 at 10:16 pm to Geauxtiga
Wasn't aware of this. Closing on a house this week and made a big deal out of assuming the sellers policy
Posted on 5/17/11 at 8:56 am to xenon16
Posted on 5/17/11 at 9:19 am to Chad504boy
quote:
Flood Insurance Loophole
The House that burned down in Melville yesterday comes to mind.
Posted on 5/17/11 at 9:20 am to Kajungee
quote:
The House that burned down in Melville yesterday comes to mind.
An amazing coincidence for sure.
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