Trey Bowden

The TV commercials have been running more than ever before. The camera, placed at floor level, pans across a damaged room while audio clips of flood victims play. “Just a few inches of water caused all this damage?”

If you live within the boundaries of a 100-year flood plain you might think that the odds of your home flooding are really quite low. In fact, the Federal Emergency Management Agency has determined that this home has a 26 percent chance of flooding during a 30-year period. Since most mortgages are structured for 30 years, lenders are quite interested in protecting the properties they have mortgaged that sit in flood risk areas.

According to the U.S. Code Title 42, Chapter 50, Sec. 4001, the lender (mortgage company lender or broker) is responsible for making the determination whether a property to be financed is located in a special flood hazard area and whether or not flood insurance is required. Homes noted by a survey or mortgage lender to be in the “100-year flood plain” will require flood insurance in order to obtain a mortgage.

The National Flood Insurance Program is the provider of national flood insurance and is overseen by FEMA. The NFIP creates Flood Insurance Rate Maps (FIRM) to determine the location of various flood risk areas and which properties fall inside these areas. Lenders use these maps to determine the level of risk to a particular property.

This past week I was nearing the closing of a new mortgage for a home in far south Oklahoma City. The home was built in 1976 and has over the years been sold several times. Most recently the home was purchased in late July at a sheriff’s sale. Some minor repairs were made to the home and it was now being purchased at a fair price. Just a few days before closing the lender sent me a “flood certification” showing the property to be located in a high risk flood zone. None of the previous owners (including the most recent owner, who had owned the home for less than 100 days) was required by their lender to purchase flood insurance.

After several calls and quite a few straight questions I discovered that the NFIP had updated its flood mapping of that area in September of this year, after the home was purchased at sheriff’s sale. The purchaser would now be required to purchase flood insurance. This came as a surprise to the purchaser, the seller, and both realtors. Additionally, in the next few weeks most of the homeowners in that neighborhood will be surprised by letters from their lenders that they too will be required to purchase flood insurance.

A casual look at the property would have almost anyone believing that this home is not at risk. You may someday find yourself in a similar situation. Please remember that the flood maps cannot reflect every variation in the physical geography of an area.

Therefore, a FIRM occasionally will show a property as being in a high risk area, even though the building may be above the base flood elevation.

There is a way to resolve this situation. A property owner can submit property and elevation materials that support a request for a Letter of Map Amendment to remove the property from the area determined to be at high risk. This evidence can be obtained at moderate cost by contacting a surveyor and requesting an elevation certificate. This certificate must then be submitted to FEMA for consideration. Please know that this entire process can take up to 90 days to complete.

A free resource to determine if your home is within a flood zone can be found at www.floodsmart.gov. The “One-step Flood Risk Profile” form requires you to only enter your address and click the “go” box to determine where your home sits in reference to the flood plain.

TREY BOWDEN is a licensed mortgage professional in Edmond. To read more go to: http://homeowner-gonemad.blogspot.com.