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FEMA Flood Zones & Lending Standards

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Terrel L. Shields

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May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
For several years, bankers have been under pressure by regulators to identify flood prone properties and require flood insurance. Had lunch today with a local businessman who have a number of buildings which he operates his business out of and a few of the buildings are leased but he runs his own business of welding and erection (specializes in red iron commercial frames and works government, University, and similar new industrial framing projects.) His south most building is the lowest elevation. On the south side of the property is a dry drainage. Only in a storm event does it accumulate water.

Our local flood map was unmapped in that area for decades but in the upper reaches of the drainage, it was partially mapped. So clearly downstream should have "hooked up" to a creek there about a mile and half away. The water on his property has never been within 200' of buildings since constructed. In fact, the drainage probably averages running water about once every other year.

FEMA finally mapped the area so when he renewed his note the banker informed him that the flood service said his building corner may be in the flood zone, and even then only part way up the foundation. But he provided a survey which shows he was well above the offending elevation line. That was a thousand bucks. Now FEMA came back on the banker and said they not only need a city official (in this case the Mayor or city inspector) to write a letter saying that it is out of the flood zone...but now the real bite. They insist that they need a LETTER from the Game & Fish Commission that the flood zone does not threaten any endangered species. WTH now? Does anyone think their state GFC gives a rat about this issue? And the response so far from the GFC is "what the L do we have to do with this?"

When I asked if this was coming from the bank (no) the city (no) the underwriters (no) or FEMA directly, it was the businessman's understanding that it was FEMA themselves who asked for the letters challenging their mapping..I donno...FDIC or FEMA, it sounds stupid

The banker is baffled. The borrower is baffled how his back lot pasture is suddenly some sort of endangered species sanctuary. It is idiotic and it is another hint that we need some real reforms that prevent such stupidity. The surveyor was engaged for the elevation survey, and is licensed. That should have been the end of it.
 

jay trotta

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Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
No sense whatsoever; several years back I had a guy who lived near/above a lake, it was at a minimum 40 steps to the dock and another 8 feet to the water line. The lake would need to rise some 80 to 100 feet to be anywhere near the dwelling, but FEMA noted the house in an AE flood zone.
Should the lake ever rise to that elevation, a good portion of the East Coast would be gone and FEMA does not have any where near enough funds to cover that damage. I know there are still people in New Jersey & New York that haven't collected from the Hurricanes a few years back, Yet !!
Where is all the Moneys that have been collected for the past 20-40 years ?? Bonus money for those who fail to meet the obligation to the Public ??
Simply amazing
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
FEMA just redid Sarasota County. People that were out are now in flood zones, and are having to get elevation surveys. However, we have a alternative to FEMA insurance that is much cheaper, and FEMA is hemmoraging policies in Florida.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
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Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Brings to mind a question. My GPS has altitude on it...could I just cite that if there was an issue?
 

Sid Holderly

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Gold Supporting Member
Joined
Jun 16, 2005
Professional Status
Certified Residential Appraiser
State
Indiana
Elevation surveys are often now needed for local lake (reservoir) properties if the water line touches the property line. Another 400 to 600 dollars generally.
 

TRESinc

Elite Member
Joined
Dec 1, 2011
Professional Status
Licensed Appraiser
State
Ohio
the photo below is of a condo complex in which i own a rental. there are 3 levels per building, 4 units per level.

the upper left corner of the lower-left building is approximately 15' from the creek, and the creek sits about 12' below the ground level that the buildings and parking lot are on. if you look closely you will see a little red line on the upper left corner of that building. when they redid the flood maps a couple years ago that is the portion of the building that was moved to be in a flood zone. if the creek was to rise to the level needed to reach the corner of the building the entire city would be several feet underwater, something which has never happened.

my unit is on the top floor, lower right hand side of said building, or as far away from the minuscule portion of the building in the flood zone as one could possibly be. once they redid the flood maps i was required to obtain flood insurance, and it was a pretty significant cost. it was far more than the regular insurance i carry and the rental insurance on top of that. additionally the association (i am on the board) has to carry flood insurance on the building as well, so by placing that ever so tiny amount of the building in the flood zone it generated 13 different flood insurance policies. FEMA sucks. it is my own personal feeling but i swear they are in bed with insurance companies. they generate billions of dollars in policies for insurance companies knowing full well those policies will never be put to use, as is the case with myself and the other 11 owners (and 13 total flood insurance policies) in this building.

flood.jpg
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Another story. A local Christian Radio station expanded into Oklahoma so they can reach Tulsa. The site for their new Tower is on top of a high in a rural development. The Tower is on a few acres. The site had to be certified flood free. They had to get a survey to prove it wasn't a cemetery, an archeological site, had significant native American "sacred" land, and there were no endangered species of plant or animal on the site. The site is within the Cherokee Nation. But they were required not only the approval of the Cherokee Nation but every tribe in the entire state of Oklahoma. Do you know how many tribes formally exist in the state? The engineer for the station told that to me this morning.
 

techbiker

Sophomore Member
Joined
Dec 4, 2015
Professional Status
General Public
State
Texas
Insane.

We're in a flood zone, however my understanding is it needs to rain ~9 inches per hour just to reach BFE. Even then, our building is elevated 2' above BFE. The whole city would be inundated at that point. In fact, I don't believe so much rain has fallen in such a small time in the history of the state.

Still we are required to carry flood insurance.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Still we are required to carry flood insurance.
I understand and of course it is possible but the issue to me is why all the other roadblocks? Why would you need the approval of a city when the surveyor is RIGHT...? And the GFC is baffled as they are not the arbitrators of endangered species...inside a city duh.
 

techbiker

Sophomore Member
Joined
Dec 4, 2015
Professional Status
General Public
State
Texas
I understand and of course it is possible but the issue to me is why all the other roadblocks? Why would you need the approval of a city when the surveyor is RIGHT...? And the GFC is baffled as they are not the arbitrators of endangered species...inside a city duh.

100% agree.

Everything is a "flood zone" if the water rises high enough. Every parcel is an "endangered species habitat" if an endangered bird decides to make a nest there. Government is a 1 size fits none solution. We need to jettison government control in favor of free markets.
 
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