Flood Flashcards
Assume that the properties involved in the following loans are located in special flood hazard areas. Which loans would NOT require flood insurance as a condition of the loan?
a. A mortgage loan made to a consumer secured by a residence in a community in which flood insurance is available
b. A commercial loan secured by residential real estate located in a community
in which flood insurance is available
C. A consumer loan secured by a lake house located in a community in which flood insurance is not available
d. A loan for the purpose of making investments secured by commercial rental property located in a community in which flood insurance is available
C. A consumer loan secured by a lake house located in a community in which flood insurance is not available
Which of the following loans does NOT require flood insurance?
Loan A is a commercial loan that has been on the books for two years and has been renewed twice. Flood insurance was legally required on the loan at the time it was made. There was a flood insurance policy in effect at the loan’s inception, but it expired and was not renewed.
Loan B is a consumer loan secured by a mobile home that is located in a flood hazard area in which federal flood insurance is not available.
Loan C is a commercial loan that the bank would be willing to make on an unsecured basis, but the borrower has offered some commercial real estate property as collateral. The property has one vacant building on it, and it is in a
flood hazard area in a community where federal flood insurance is available.
a. Loan A
b. Loan B
c. Loan C
d. None of the loans
b. Loan B
Which of the following loans requires a notice of special flood hazard?
Loan A is to be secured by a car-wash facility located in a special flood hazard area in a community where federal flood insurance is not available
Loan B is to be secured by a rental house not located in a special flood hazard area but in a community where flood insurance is available
Loan C is to be secured by a vacant lot located in a special flood hazard area in a community where federal flood insurance is available
a. Loan A
b. Loan B
c. Loan C
d. All the loans
a. Loan A
When does a notice that the borrower’s property is located in a special flood hazard area have to be given to the borrower?
a. Before making a commitment to lend
b. Within 10 days after closing
c. At the time of the application
d. Within a reasonable time before completion of the transaction, but no later than the bank sends other notices concerning insurance or taxes
d. Within a reasonable time before completion of the transaction, but no later than the bank sends other notices concerning insurance or taxes
State National Bank is making a loan to the ACME Corporation to be secured by ACME’s manufacturing plant. The bank’s loan is for $250,000. The appraised value of the plant is $750,000. The maximum amount of flood insurance available for a commercial building is $500,000. What is the least amount of flood insurance the bank must require under the Flood Regulations?
a. $250,000
b. $750,000
C. $500,000
d. None of the above
a. $250,000
Which of the following is acceptable proof of the purchase of flood hazard insurance?
a. Copy of the declarations page of the insurance policy
b. A certificate of insurance
C. Flood insurance binder
d. Letter signed by the borrower agreeing to purchase the insurance
a. Copy of the declarations page of the insurance policy
When is the purchase of flood insurance required on or before loan closing?
a. Construction mortgage loan is to be secured by a single-family dwelling in a participating community
b. Conventional mortgage loan is to be secured by an attached mobile home in a special flood hazard area of a nonparticipating community
c. Conventional mortgage loan is to be secured by a vacant lot located in a special flood hazard area of a participating community
d. Business mortgage loan is to be secured by a commercial building located in a special flood hazard area of a participating community
d. Business mortgage loan is to be secured by a commercial building located in a special flood hazard area of a participating community
Flood insurance lapsed on a loan at First Bank on June 1. The bank sent the borrower a notice stating that flood insurance was required and giving the borrower 45 days (until July 15) to reinstate the policy or purchase a new one. If the borrower does not reinstate the flood insurance and the bank force places a policy and charges the borrower for the premium, what date should the force placed policy start coverage?
a. June 1
b. June 30
c July 1
d. July 15
a. June 1
Which one of the following descriptions is not included in the definition of private flood insurance?
a. Is issued by an insurance company that is licensed, admitted, or otherwise approved to engage in the business of insurance by the insurance regulator of the State or jurisdiction in which the property to be insured is located
b. Provides flood insurance coverage that is at least as broad as the coverage provided under an SFIP for the same type of property
c. Includes a requirement for the insurer to give written notice 90 days before cancellation or non-renewal of flood insurance coverage
d. Contains cancellation provisions that are as restrictive as the provisions contained in an SFIP
c. Includes a requirement for the insurer to give written notice 90 days before cancellation or non-renewal of flood insurance coverage
