What if I don't have flood insurance and am required by law to have it?

Question

I bought my home not realizing I needed flood insurance until after the fact and it cost me $2500. The next year I coudln't pay it and the mortage (Countrywide) placed lender placed coverage for only $700 for the year covering interest on loan (a lot cheaper). My house is on top a hill that would have to be a big rain to come close to flooding and hasn't flooded in 60 years. My question is can they foreclose if I don't fix this or each year will the just continue to use there lender placed policy which is allowing me the opportunity to stay in my home? Am bout 3 months from next insurance due date.

Answer 1

Mortgage lenders are required by the Federal Government to make sure every loan they have on property that is in a flood zone carries flood insurance. If they do not, they are fined $100 per month for each one that is not in compliance. This was years ago, the fine may be higher now. When you closed, you should have received a Flood Determination form that will tell you your flood zone. If your zone is B, C, or X, it is not required for you to have flood insurance. If your zone starts with an A or a V, they will require it. Anyway, they forced placed flood coverage to cover your loan amount only. If you truly feel you are not in a flood zone, you have to contact an engineer and pay him or her out of your pocket to do a survey. If your house (your land may still be) is not in a special hazard flood zone, the engineer will have to submit a letter of map amendment (the engineer should know what this is). This is acceptable to your lender to no longer require flood insurance. This will also be required by NFIP to cancel the policy. They will cancel it flat (you get all your money back) if requested. All that an Elevation Certificate says is that your house is so many feet above the 100 year flood plain, NOT that it is not in a flood zone. This will affect the flood rates only (up or down, but if the lowest point of your basement is 3 or more feet above the flood plain, it could be a significant savings). An elevation certificate will be required if your home is built after the latest edition of the flood maps for your town/area, known as postFIRM. It is not required for houses built before this date, known as preFIRM.
The mortgagee will not forclose as long as you continue to pay the forced placed coverage or prove to them your dwelling is not in a flood zone (by doing the above).
Hope this helps you.

Answer 2

The law NEVER requires you to carry flood insurance. The ONLY entity that ever "requires" it is your mortgage company.

Pull your original mortgage papers, to verify if it's really required.

Also, What Countrywide is doing, doesn't cover YOU or YOUR HOUSE, it only pays THEM. You will NEVER EVER collect or see any benefit from that forced placement coverage.

They can foreclose, if you don't pay for the "forced placement" coverage. Once they realize that the forced placement coverage doesn't cover flood (you have a dumb mortgage person there!) then they can foreclose if you don't carry flood.

For what it's worth, I have seen flood claims from houses on hilltops! What happens during a big rain, is water runs down the hill, past and through your house. If there is ANY land higher than you, it is easily likely that you can have a flood claim - it's not just water from the lowest point coming up, it also includes runoff water running DOWN.

One thing you MIGHT want to consider, though - is hiring a surveyor to give you an ELEVATION CERTIFICATE. The elevation certificate can be used to determine FOR SURE if your particular house is outside the 100 year flood zone - which would mean you don't have to carry flood insurance after all.

Answer 3

There is no law that says you have to carry it but if you are in a flood zone, your lender will require that you carry insurance.

The coverage that Countrywide placed on the house was a lot cheaper because the only thing they are covering is their interest. In other words, if the house is worth $300,000 and your loan is $100,000, they are ONLY covering the $100,000 worth of the house that they still own. They are not covering the equity you have in the house. They are also NOT covering your personal property, (clothing, TV's Washer, dryer, etc.). The only thing that Countrywide is covering on that policy is the amount of their loan.

PS - I forgot to answer your question about if they can foreclose. They won't foreclose as long as you pay the insurance payment on THEIR insurance.

In all honesty, if I lived on top of a hill that the chances of getting flooded were that remote, I'd probably go with the mortgage company insurance too.

Answer 4

No one is require to have flood insurance by law.

Your lender required it because your home is located in a flood plain, which is an area designated by the government to be prone to flooding. The lenders requirement probably only required sufficient coverage to protect their loan. You should check the insurance covenants that are part of your mortgage closing documents to confirm that is the case.

If the house was sold using a realtor, it should have been disclosed that the house is in a flood plain. Even so , that is easily determinable from the county or the internet.

Answer 5

Go back to the realtor that showed you the house and sue the pants off them. They think that they should be able to do zero research and show up at the settlement table to collect their commission check. Thats crap. One of the towns not far from me is in a flood zone. If people would do the math they would know that its cheaper to buy a nicer house in the next town over, than to buy a house in that town and pay for flood insurance.

Answer 6

No, they do no longer seem to be. whether they did, flood assurance would not disguise something below floor point - like basement residences. Worse, it basically covers for the named insured - your landlord. So, no way, no how, are you EVER going to have the means to get flood assurance to cover stuff on your BASEMENT place of abode. no longer whether you purchase it promptly, and not even from Lloyds of London at any fee, with that style of claims historic previous. i think of, in case you do no longer choose this to maintain happening, which you're able to flow. i think of i might have moved after the 1st time . . . that is rather not your landlord's accountability. he's not inflicting the flood.

Answer 7

You are never required to carry flood insurance unless your lender requires it. However, keep in mind that it is incredibly inexpensive, and virtually no damage caused by a flood is covered by your homeowner's coverage.