Yes/No Flood Hazard Area

[CANative]

I have a lot of areas in Zone D which is an area not mapped by FEMA with an undetermined but possible flood hazard.

Brad... I'm pretty sure Fannie has a "if any of the lot is in, then it's yes" requirement. I'll check it out when I have a minute or two.

 

[Brad Ellis]

Greg,

While you may be correct- and I'll wait to see what you find ( I could not find it), that would not change the insurance program. That portion is goverened by laws and regulatory compliance.

Of course, if Fannie says they want it that way it would be a supplemental that we no longer have since Fannie's guidelines are just that- guidelines.

I will tell you that an employee of Fannie some years ago spoke to my chapter meeting and she told us she had to get insurance because one small portion of her lot, along a river, caused her lender to require it. However, she was quick to point out that it was not a Fannie requirement. So, this could have changed but I have not yet seen it. So, please do post it if you find it as it could well be a scope of work issue.

Brad

 

[Greg davenport]

Greg,

While you may be correct- and I'll wait to see what you find ( I could not find it), that would not change the insurance program. That portion is goverened by laws and regulatory compliance.

Of course, if Fannie says they want it that way it would be a supplemental that we no longer have since Fannie's guidelines are just that- guidelines.

Brad

This is straight off the 1004

3. The appraiser has examined the available flood maps that are provided by the Federal Emergency Management Agency (or other data sources) and has noted in this appraisal report whether any portion of the subject site is located in an identified Special Flood Hazard Area. Because the appraiser is not a surveyor, he or she makes no guarantees, express or implied, regarding this determination.

I read it to mean the site. nothing about a structure in that line that I can find.
Anyone find something else from Fannie?

 

[Terrel L. Shields]

any portion of the subject site

we appraisers have to report it. Whether flood insurance is required or not is up to a survey, it can be waived if the improvements are not in the flood zone. I just completed an appraisal where the owner hopes the value is LOW (as opposed to usually wanting it high) because he isn't borrowing much and he is in a flood zone. They will have to base the premium upon the value of the improvements...ironically its a car wash. Further, the property floods only because of a city created coffer dam. The last time it flooded the insurance claim was denied because the insurance company claimed the flood was the problem of the city. So the guy has to pay for flood insurance which will not pay for a flood....and the rules are such that he is required to pay it before the bank can make the loan.

 

[CANative]

From the selling guide.

Blue = Appraiser responsibility

Red = Lender responsibility

XI, 404.06: Special Flood Hazard Area (11/01/05)

Our appraisal report forms provide an area for the appraiser to indicate whether or not the property is located in a Special Flood Hazard Area that is identified on the Federal Emergency Management Agency’s (FEMA) Flood Insurance Rate Maps. These maps include areas that are within the 100-year flood boundary. (Note: The term “100-year flood” does not mean that a flood will occur once in every 100 years, but rather that there is a one percent or greater chance that a flood level will be equal or exceeded in any given year.) The appraiser also must indicate the specific FEMA flood zone and the map number and its effective date.

Flood Insurance Rate Maps can be obtained by contacting FEMA at the address, telephone number, fax number, or Web site shown below:

FEMA Map Service Center
P.O. Box 1038
Jessup, MD 20794-1038
Telephone: 1-800-358-9616
Fax: 1-800-358-9620
Web site: web1.msc.FEMA.gov.

If any part of the principal structure is located in a Special Flood Hazard Area—zones A, AE, AH, AO, AR, A1-30, A-99, V, VE, VO, or V1-30—flood insurance is required. If the principal structure is not located in the Special Flood Hazard Area, flood insurance is generally not required.

 

[Pat Butler]

My guess is that Fannie is holding us responsible for the larger picture- namely, determining whether or not the site is even in an adverse flood zone. That give the lender a heads-up to do further research to determine whether or not the improvements lie in the flood zone.

 

[Brad Ellis]

Greg,

Thanks but that does not at all tell me that Fannie wants you to report if a portion of the lot is within the flood hazard area if the improvements are not.

The end sentence it is, of course, clear and speaks only to the improvements. That is what the law/regulations require.

What I think has happened here is that you (and clearly some others) are interpreting that Fannie wants that even though they have never said so. In fact, at more than one meeting in which we have had speakers from Fannie they have specifically said that they are concerned only about the improvements. Now the reason for that is because, even in a flood, the land does not disappear- it remains, while any improvments may either disappear altogether or be damaged badly enough that it affects the collateral.

The specific example I related about the Fannie speaker who was forced by her lender to get it is a case in point. She knew that Fannie did not require that but just gave in because she did not want to fight with them over it.

So, unless you have something definitive in writing from them, I'll not budge on this. What you posted does not prove your point or mine- it is actually moot on the question of lot vs. improvements as regards the appraiser's responsibility. Compliance with the flood insurance program is mandatory and it specifies improvements only. And, of course, there will be many times when you cannot tell without the topo survey. And yes, it is the lenders' responsibility and that is why each of them buys a flood cert.

The reason it is on the form (from Mark Simpson- formerly of Fannie) is for the appraiser to determine if there is a value hit due to that factor.

Brad

 

[Bobby Bucks]

If the HVAC unit platform can also be utilized as a deer stand I check the box that says YES. Haven't been wrong yet.

 

[Non Sequitur]

Bucks makes a good point, all good hunters know the lay of the land.

 

[Dale Hill]

Mr. Ellis, Joe Minnich stated in New Orleans (ironically), during Valuation 2005, that the YES/NO answer to this question was related to the site, not the improvements, as the question was in the Site section of the report, not the Improvements section.
I'm also sure that you would agree that few appraisers would be qualified (with out an elevation survey) to make this determination as to where on a property zone A would end and another zone began, for instance.