I've been told I have to buy flood insurance for my home, but my surveyor says I'm out of the floodplain. What do I do?
Why won't the lender take my surveyor's word?
The Flood Insurance Rate Maps (FIRMs) and Flood Hazard Boundary Maps (FHBM) portray the Special Flood Hazard Area (SFHA), or what is more commonly known as the gray shaded area, within which the purchase of flood insurance is required as a condition for granting a mortgage from a federally-backed or federally-regulated lending institution. The lender or insurance agent must use the boundaries of the SFHAs shown on the Flood Insurance Rate Maps to determine if mandatory flood insurance applies. The area between the flooding source and the flood hazard boundary is commonly shaded gray. Thus, even though a site survey or an elevation certificate indicates the homesite is above the Base Flood Elevation (BFE) and is technically outside the floodplain, if the homesite is within the gray shaded area (the SFHA) on the map, the bank will say flood insurance is required.
Are the flood maps wrong?
The general lack of detailed topographic mapping throughout this nation means that the floodplain boundaries in most communities cannot be accurately mapped. Since, FEMA (Federal Emergency Management Agency) cannot afford to field check all floodplain boundaries, some areas of high ground are shown as floodplain, and some low areas are not.
What is FEMA going to do about it?
In short, nothing. However, FEMA created the Letter of Map Amendment and Revision (LOMA/R) process to correct or change flood maps [FIRMs and FHBMs] to reflect actual ground surveys or better topographic mapping. Letters are issued by FEMA officially removing lots or portions of lots (by legal description) from the SFHA or changing the boundaries of the SFHA. These are dated and sent to the homeowner applicant and are also filed with the municipality or county within which the property is located. The building site is removed from flood zone AE, AI-30, A, etc and placed in flood zone B, C, or X, which are not part of the SFHA [Special Flood Hazard Area].
When a LOMA/R is issued removing a building site from the SFHA, the mandatory flood insurance purchase requirement is lifted. However, the lender always has the option of requiring flood insurance anyway. For example, the homesite might be just a few inches above BFE, so the lender feels that there is still a threat of flood damage to their "secured property". Once the flood zone has been changed to B, C, or X, the building qualifies for a PREFFERRED RISK POLICY, the least expensive flood insurance available.
Letter of Map Amendment (LOMA): This is used to revise the SFHA boundary based on detailed elevation surveying and/or topographic mapping of natural conditions. If the homesite and the lowest floor of the building (including basement or garage) is above the BFE, FEMA can amend the map to remove the homesite and other land area from the SFHA. (The map will not actually be physically changed or revised, but the structure or homesite will be certified as being outside the SFHA)
Letter of Map Revision, based on fill (LOMR-F): When FILL dirt is placed on property to raise the building site above the BFE FEMA can remove the raised area from the boundaries of the SFHA, thus revising the FIRM. This is a man-made change to the floodplain.
How do I get one?
A homeowner may apply for a LOMA or LOMR-F. However, a Site Plan & Boundary Survey and Elevation Information Form, Elevation Data Sheet, or Elevation Certificate must accompany each application. These must be prepared, sealed and certified by a Professional Land Surveyor. The applicant is responsible for paying for this survey information.
I have multiple structures on my property. Do I need insurance on all structures?
Yes, in most cases. Quoting from the FDIC Compliance Manual, dated January 2014 page V-6.4, “Multiple structures that secure a loan located in an SFHA generally must each be covered by flood insurance, even though the value of one structure may be sufficient to cover the loan amount. FEMA does permit borrowers to insure nonresidential buildings using one policy with a schedule separately listing each building.”
How long does it take?
It normally takes 6-8 weeks from the time an application is received until a letter of determination is issued. Applications are processed on a first come, first served basis.
What do I do in the meantime?
Consider purchasing flood insurance. If you want to close without waiting 6-8 weeks for the LOMA or LOMR-F to be issued. Review this with your loan officer or your insurance agent first.
Isn't that just a waste of money?
No!! Usually (not always), you can get a partial or a complete Refund. Please read this quote from the Flood Insurance Manual, Pages CN I and 2:
9. "INSURANCE NO LONGER REQUIRED BY MORTGAGEE BECAUSE PROPERTY IS NO LONGER LOCATED IN A SPECIAL FLOOD HAZARD AREA- Flood insurance was initially required by the mortgagee or other lender because the property was determined to be in a SFHA. Following a map revision, the property was no longer located in a SFHA. A policy can be cancelled provided that the mortgagee confirms in writing that:
(1) the insurance was required as part of the mortgage; and
(2) the mortgagee requirement for flood insurance no longer applies.
Providing no [flood insurance] claim has been paid or is pending, the full premium shall be refunded for the current policy year, and for an additional policy year in those cases where the insured had been required to renew the policy during the period when a revised map was being reprinted. IF A CLAIM HAS BEEN PAID OR IS PENDING, NO REFUND IS ALLOWED."
Where do I send it (LOMA)?
All map amendments and revisions should be submitted to:
847 SOUTH PICKETT STREET
ALEXANDRIA, VA 22304-4605
Attn.: LOMA Manager
What if there is no flood elevation on the flood map?
If the property is in Flood Zone A, without a letter or number after the "A", the flood zone is "approximate". [FEMA calls it an "unnumbered A Zone"] No Base Flood Elevation (BFE) has been determined for the area. However, FEMA can only approve a LOMA/R if a BFE has been established using standard engineering methodology or using the simplified method.
Sometimes another government agency has done a flood study and determined flood elevations, or perhaps the lot is in a fairly recent subdivision for which flood elevations were determined as part of the land development process. Check with your local building inspector or code enforcement officer. However, it is unlikely in this area to find such information.
If there is no existing flood study, one will have to be developed in order to process a LOMA/R, either by the simplified methodology or by a watershed study, which is very costly.
LOMAs or LOMR-Fs in Flood Zone A are usually more complicated. Be prepared!
Source : FEMA, FDIC
Provided courtesy of :Herrick & Salsbury, Inc.