Flood Compliance by the Case - H2O Partners€¦ · 1 1 Flood Compliance by the Case A CASE STUDY APPROACH FOR LENDERS Presented by: Here’s our agenda for today 3 Topic 1: Private

1

1

Flood Compliance

by the Case A CASE STUDY APPROACH FOR LENDERS

Presented by:

Here’s our

agenda for today

3

Topic 1: Private Flood Insurance

Topic 2: Force Placement

Topic 3: Condo Conundrum

Topic 4: Escrows

Topic 5: Detached Structures Exemption

Topic 6: Insurable Value

Topic 7: Resources

2

Topic 1

PRIVATE FLOOD INSURANCE 4

6/1/2018

Ask The Expert

Q. How does a bank ensure adequacy to regulations

when presented with a private flood policy?

Q. What are the safety & soundness risks faced when

NFIP limits on commercial insurance are $500K but a

building has insurable value of $2M? Should banks be

requiring more flood insurance?

Private Flood Insurance

Private Flood Questions

5

3

History of Private Flood Insurance:

Suggested “guidelines” appeared in Mandatory Purchase booklet for years

March 2012: FEMA clarified its position (advisory, not regulatory)

July 2012: BW-12 enacted (Sec. 100239 – defined components)

October 2013: Joint Notice of Proposed Rulemaking (Safe harbors)

March 2014: HFIAA enacted – No private flood insurance amendment

June 25, 2015: H.R. 2901 & S. 1679 introduced in Congress

November 7, 2016: Joint Notice of Proposed Rulemaking

Loans in Areas Have Special Flood Hazards - Private Flood Insurance

Federal Register publication date

7


Private Flood

Insurance

Talking Points

NFIP set to expire 9/30/17 – requires reauthorization

Flood Insurance Market Parity and Modernization Act (Private Flood Insurance Market Development Act of 2017)

H.R. 2901 passed the House – 4/28/16

S. 1679 - received in Senate – 5/9/16

Proposes that Federal Flood Insurance and Private Flood Insurance are equal remedies for mandatory purchase of flood insurance

Establishes that any period of continuous coverage by private flood insurance meets the standard and is considered a period of continuous coverage for any statutory, regulatory or administrative continuous coverage requirement

8


Private Flood

Insurance

Talking Points

(H.R. 1422 – 3/8/17)

(S. 563 – 3/8/17)

(Extended to 7/31/18)

4

Proposes requirements regarding financial strength of private flood insurance companies …

That do not affect or conflict with any state law, regulation or procedure concerning the regulation of the business of insurance

Environment favorable to private flood insurance market Admitted insurance carriers vs. Non-admitted carriers

Resolving the Confusion About Admitted and Non-Admitted Carriers

9

Resolving the Confusion About ‘Admitted’ and ‘Non-Admitted’ Carriers


Private Flood

Insurance

Talking Points

Examples of other types of flood policies/coverage

Standalone Flood Policy

Admitted carrier

Non-admitted carrier

Difference in Condition

Policy (DIC)

Commercial Property Policy

w/flood endorsement

Mobile-Home policies

All-Risk Builder’s Risk

Policy

Manuscript Policy

Self-insurance Coverage

Excess Flood Policy

Non-NFIP Flood Coverage

10

Got You Confused?

http://insurancethoughtleadership.com/admitted-v-non-admitted-whats-the-difference/






5

Loans in Areas Having Special Flood Hazards – Private Flood Insurance (Joint Notice of Proposed Rulemaking)

A. Definitions

Mutual Aid Society


“At least as broad as” (1/2 dozen items to research – specific, not simple)

B. Requirement to purchase flood insurance

Meets statutory definition of private flood insurance

Meets the mandatory purchase requirement

C. Compliance aid for mandatory purchase

Meets definition of private flood insurance if: Policy has written summary describing how it meets definition

Lender verification in writing that policy meets definition

Endorsement/provision within policy that states definition met

11


Private Flood

Insurance

Talking Points

Loans in Areas Having Special Flood Hazards – Private Flood Insurance (Joint Notice of Proposed Rulemaking)

D. Discretionary Acceptance

Authorized insurer

Covers lender and borrower as loss payees

Cancellation for same reasons as SFIP

Coverage as broad as or similar to SFIP

Exception for mutual aid societies

Discretionary acceptance for non-residential property

12


Private Flood

Insurance

Talking Points

6

13

Does your financial institution have a set of written

procedures that outline which private flood

insurance policies are acceptable?

a. Yes

b. No

c. Hoping to have one soon

Poll Question #1

14

6/1/2018 14

Ask The Expert

Non-NFIP Flood Insurance

Q: In the absence of regulations, how does a lender

determine whether a private flood insurance policy is

acceptable?


7

Original private flood insurance criteria:

Licensure Licensed, admitted or approved by State insurance regulator

Surplus lines recognition (non-residential commercial) Carrier should be recognized, or not disapproved, as a surplus lines

carrier

Requirement of 45-day cancellation/non-renewal notice Policy should be as restrictive as SFIP’s cancellation provisions

Breadth of policy coverage

Similar mortgage clause

Legal recourse 15


Private Flood

Insurance

Talking Points

Resources for vetting private market flood insurance carriers

Department of insurance websites

Demo 1: Ohio Department of Insurance

Demo 2: Florida Office of Insurance Regulation

Demo 3: A.M. Best Rating Service by Company

Demo 4: Best’s Financial Strength Rating Guide 16


Private Flood

Insurance

Talking Points

http://www.insurance.ohio.gov/Pages/default.aspx

https://www.floir.com/

http://www.ambest.com/home/default.aspx

http://www.ambest.com/ratings/guide.pdf

8

9

10

11

12








Private Flood

Insurance

Talking Points





13








Private Flood

Insurance

Talking Points





14

A.M. Best Rating Guide

A.M. Best Rating Guide

15








Private Flood

Insurance

Talking Points





16

34

6/1/2018 34

Ask The Expert

Non-NFIP Flood Insurance

Q: What are some considerations for a borrower when

switching to private flood insurance?


17

Pros:

In competitive market, coverage may be less expensive

Coverage may be broader

Available coverage limits may be higher

Greater flexibility with deductibles.

Cons:

Private market may not always be price competitive

Possible loss of rating subsidy if borrower (insured) returns to NFIP for coverage

Private market capacity and availability may vary with market conditions

35


Private Flood

Insurance

Talking Points

36 CASE FILE

Topic 1

18

1. Reform legislation encourages

expansion of private flood insurance

2. FEMA guidance advisory, not

regulatory

3. Legislators and regulators are re-

evaluating their approaches to

private flood insurance

37 CASE FILE NOTES

Topic 2

FORCE PLACEMENT 38

19

6/1/2018

Ask The Expert

I am confused about when I can force place flood insurance and when I have

to send the notice. Seems like every time I think I have it down, something

else comes along that seems to change what I think I know.

When I determine that my borrower’s flood coverage has lapsed and I send

out the 45-day notice, can I force place the coverage right away so there’s not

any interruption in the coverage?

Force Placement Question


39

Force Placement Overview

Lender determines at any time during the life of the loan that property securing the loan is located in SFHA;

Flood insurance is available;

Flood insurance is inadequate or does not exist; and

After required notice, borrower fails to purchase appropriate amount of coverage.

40

Send 45 day

letter

Allow time for

borrower to

purchase flood

insurance

Force

Place?

20

Sec. 100244 – Force Placement – Final Rule

Required 45-day notice must be sent:

Upon receipt of a notice of cancellation or expiration from an

insurance provider or internal flood monitoring system

When lender learns a property is now a designated loan due to a

map change

Impact of Biggert-Waters Reform Act

41

FINAL RULE

Clarifies that the

required notice must be

sent following the date

of lapse or insufficient

coverage notification.

Only courtesy notice

prior.

Sec. 100244 – Force Placement

Premium and fees a lender or servicer may charge include:

Premium or fees incurred for coverage

Beginning on the date flood insurance coverage lapsed or,

Did not provide sufficient coverage amount


42

FINAL RULE

Lapsed date = policy

expiration date or

effective date the policy

is cancelled

21


Final Rule clarifies a lender or servicer may force place coverage:

Any time during 45-day notice period

Do not have to wait 45 days after providing notice to force place

Force placing prior to expiration of 45-day notice period may create

additional work effort


43

NOTE

There can be a

distinction made

between when a policy

is put in place and when

it is effective. Consider

force placing effective

the day after expiration.


Requires lender or servicer within 30 days of:

Receiving confirmation of borrower’s coverage

Notify insurer to terminate force-place insurance

Refund all force-placed premium and fees paid by borrower

During any overlap in coverage


44

FINAL RULE

Lender required to

“notify” insurer to

cancel.

22



45

Requires lender or servicer to:

Accept borrower’s existing policy declarations page as confirmation

Declarations page must include:

Identity/Contact information for insurance company or agent

Existing policy number

Lender may accept alternative evidence

FINAL RULE

Lender responsible for

determining adequacy of

coverage. If

inadequate, notify

borrower.

46 CASE FILE

Topic 2

23

1. Can charge force place premium

and fees from date of lapse

2. Date of lapse equals the policy’s

expiration date or the effective date

the policy is cancelled

3. Notify insurer to terminate force

placed policy within 30 days of

confirmation of borrower’s existing

flood insurance coverage

47 CASE FILE NOTES

6/1/2018

Ask The Expert

When I force place flood coverage for one of my borrowers, is that considered

a MIRE event? I have heard conflicting opinions on this topic.



48

24

Three Categories – Force Place as MIRE Event

49

Category 1

• Premium/fees added to UPB • Insurance amount must include FP premium and fees

• Triggering event depends on loan contract

Category 2

• Premium/fees added to an unsecured account • If FP is in separate, unsecured account:

• Not an increase

• Not a triggering event

Category 3

• Premium/fees billed to borrower • Not an increase/triggering event

• If borrower fails to pay, see Categories 1 & 2

50

Single family dwelling: • $350,000 insurable value

• $200,000 loan amount

• Fails to renew flood policy

• Need to force place

• Adding premium/fees to UPB

Cost of FP flood policy: $2,000

Equals $1 per $100 coverage limit

$200,0(00) X 1.00 = $2,000

UPB increases to $202,000

Amount of FP = $200,000

$2,0(00) X 1.00 = $20



$100 X 1.00 = $1



25

Topic 3

CONDO CONUNDRUM 51

6/1/2018

Ask The Expert

I found your training very informative. My only complaint it was not long enough.

I do have a question on Condo insurance. We have a Condo policy RCBAP that has

$500,000 in coverage and has four units.

We were dividing the $500,000 by 4 = $125,000 per unit.

The customer’s loan has a balance of $131,000. We are requiring the customer to

obtain his own policy for $6,000 to cover the balance. Is that correct?

Condo Conundrum – Part 1

Condo Conundrum Question

52

26

6/1/2018

Ask The Expert

I have spoken to you before at the Minnesota Bankers Association Advanced

Compliance Workshops. I hope you can help answer a question for me.

We have a loan secured by a condo in Florida.

The RCV on the building is $35,249,400, but the RCBAP policy is written at a limit of

$28,199,500, which is 80% of RCV. Policy says 100% Replacement Cost. It appears this

is ok per the FEMA guidelines.

However, there are 126 units, so this is flood coverage of $223,805.55 per unit.

We have a loan for greater than $250,000 and the unit value is more than $250,000.

My Question: Are we required to have $250,000 of flood insurance coverage? If so,

this means the borrower will have to purchase a policy for the difference of $26,194.45.

Condo Conundrum – Part 2

Condo Condundrum Question

53

RCBAP co-insurance clause/penalty

Avoid if insured to max limit, or

80% of RCV at time of loss

At 80%, building is 20% uninsured

Coverage limit division…

Assumes all units are identical

Discuss 4-unit condo building

Discuss 126-unit condo building 54

Condo Conundrum

Condo

Coverage

Talking Points

27

4-unit residential condominium building

3 units identical in size and value

4th unit is two floors - double size and value of other 3 units

126-unit residential condominium building

Building has 1, 2 and 3 bedroom units

All different sizes – all 2 bedrooms not the same size

Cookie cutter approach – all units equal

Approach used in Q. 28-29 Interagency Q&As

May look to percentage of ownership – see assessments

55

Condo Conundrum

Condo

Coverage

Talking Points

56

Unit 2

Unit 1

Unit 3

Unit 4

Unit 1 = 20% Ownership




$500,000 Coverage Limit

Unit 4

$500K X .40 = $200,000

vs.

$500K X .25 = $125,000

4-Unit Residential

Condo Building

28

Topic 4

ESCROWS 58

Revised escrow provisions effective 1/1/16

Applies to residential improved real estate with a triggering event only

Escrow notification part of notice to borrower

Notice of Special Flood Hazards updated

Small lender and loan exceptions to escrow requirement

59

Reform Legislation – Escrows

Revised Escrow

Requirements

Mandatory escrows in place since National Flood Insurance Reform Act of 1994.

29

60

Which statement best describes your knowledge of

the lending institution where you are employed?

a. I know it definitely has less than $1 billion in assets

b. I know it definitely has more than $1 billion in assets

c. I am not sure if it has < or > $1 billion in assets

d. By next year it will have more than $1 billion in assets

e. I do not work for a lending institution

Poll Question #2

61

6/1/2018 61

Ask The Expert

Escrows

Q: If a small lender requires the escrow of taxes or

insurance premiums only under certain conditions or for

only a portion of the loan term, is it considered to have a

policy of consistently and uniformly requiring escrows?

Escrow Question

30

Small Lender Exception

62

Less than $1 billion in assets if on or before July 6, 2012:

Not required under Federal or State law to:

Deposit taxes, insurance premiums, fees, or any other charges in an escrow account

for the entire term of the loan secured by residential improved real estate or a mobile

home and:

Did not have a policy of consistently and uniformly requiring:

The deposit of taxes, insurance premiums, fees, or any other charges in an escrow

account for any loans secured by residential improved real estate or a mobile home.

Less than $1 billion in assets:

Either of prior two calendar years as of 12/31:

Less than $1 billion on 12/31/16

More than $1 billion on 12/31/17

Small lender exception applies on 1/1/18

If still more than $1billion on 12/31/18:

Lose small lender exception (2 prior years > $1B)

Change in Status:

More than $1 billion in assets (2 prior years):

Effective July 1

First calendar year of changed status

Must escrow flood insurance premium and fees

Designated loans:

Made, Increase, Renewed or Extended

On or after July1

1

2

3

63

6/1/2018 63

Ask The Expert

Escrows

Q: If a small lender requires the escrow of taxes or

insurance premiums only under certain conditions or for

only a portion of the loan term, is it considered to have a

policy of consistently and uniformly requiring escrows?

Escrow Question

31

Does institution pass all three tests for small exception?

Does institution have total assets < $1 billion in one or both of two prior calendar years? (Key Date: 12/31)

Was not required as of BW-12 date of enactment (7/6/12) under federal or state law to deposit taxes, insurance premiums, fees, etc. into an escrow account “for the entire term” of any loan secured by residential improved real estate/mobile home. (HPML?)

Did not have a policy of consistently and uniformly requiring deposit of taxes, premiums, fees, etc. into an escrow account for any loans secured… (PMI/taxes above LTV threshold?)

64

Escrows

Escrow

Talking Points

Escrows: Final Joint Regulatory Guidance

Six exceptions to escrow requirement:

1. Loan primarily for business, commercial or agricultural purpose

2. Subordinate liens when flood insurance is provided at time of loan

origination

3. Condominiums, cooperatives, homeowner associations, etc.

4. Home equity lines of credit

5. Non-performing loans (90 or more days past due)

6. Short-term loans

65


EXCEPTIONS

32

Escrow Exceptions: Final Joint Regulatory Guidance

Loan primarily for business, commercial or agricultural purpose:

Residential improved real estate or mobile home

Portion of collateral

Escrow requirement does not apply

66


EXCEPTION

1


Subordinate liens when flood insurance is provided at time of loan

origination:

No requirement to monitor lien position prospectively

If lender determines the exception no longer applies

Receives notice senior lien paid off

Determines at subsequent triggering event

Must begin escrowing premium and fees

67


EXCEPTION

2

33


Condominiums, cooperatives, homeowner associations, etc.:

Flood insurance meets mandatory purchase requirements

Is provided and premium paid for by:

Condominium Association

Cooperative

Homeowner Association or other applicable group

Escrows required if:

Borrower purchases own coverage

68


EXCEPTION

3


Home equity lines of credit:

Statute does not include any exclusion to the HELOC exception

Fully drawn HELOCs included

Escrows are not required

69


EXCEPTION

4

34


Non-performing loans (90 or more days past due):

Remains non-performing unless:

Permanently modified

Entire past due amount collected or discharged

Principal

Accrued interest

Penalty interest

70


EXCEPTION

5


Short-term loans:

Must be no longer than 12 months to qualify

Extensions of 12 month or less

Exception applies

Triggering event

71


EXCEPTION

6

35


Escrow Notice

Mail or deliver notice to borrower that escrow of premiums and fees may be required

Provide the escrow notice as part of Notice of Special Flood Hazards and Availability of Federal Disaster Relief

Sample notice provided by regulators in Appendix A of bulletin

72


Escrow

Talking Points


Escrow Notice Clarification

Notice required for “excepted” loans

May lose exception during term of loan

Will be informed escrows “may” be required

73


Escrow

Talking Points

Federal law may require a lender or its servicer to escrow all premiums and fees for

flood insurance that covers any residential building or mobile home securing a loan

that is located in an area with special flood hazards. If your lender notifies you that an

escrow account is required for your loan, then you must pay your flood insurance

premiums and fees to the lender or its servicer with the same frequency as you make

loan payments for the duration of your loan.

36

Option to Escrow (01/16)

74

Required lenders to “offer and make available” to borrower the option to escrow

• Loans or lenders “excepted” as of 01/01/16

• Loans already escrowing for flood insurance

Option does not apply to:

Deliver notice to borrowers by June 30, 2016

• September 30th

• First calendar year of status change

Change of status lenders:

Can be separate notice or added to another disclosure, eg. Periodic statements

When requested, begin escrow as soon as ‘reasonably practicable’

75

6/1/2018 75

Ask The Expert

Escrows

Q: Do map changes trigger the mandatory escrow rules?

Don’t confuse mandatory purchase with

mandatory escrow

Need tripwire for escrow

Escrow Question

37

76

6/1/2018 76

Ask The Expert

Escrows

Q: If you have previously waived escrow for taxes and

hazard insurance, do you still have to escrow for flood

insurance? Can flood escrow be waived?

If you are required to escrow for flood under the

revised escrow rule, then you must escrow for

flood regardless of your decision on other

escrows.

Escrow Question

77 CASE FILE

Topic 4

38

1. Escrows affect residential

improved real estate or mobile

homes with triggering event

2. A small lender exception applies

to regulated lending institutions

with total assets < $1 billion

3. Six loan exceptions to the

escrow requirement exist

78 CASE FILE NOTES

Topic 5

DETACHED STRUCTURES 79

39

6/1/2018

Ask The Expert

Detached Structures

I am hoping you can answer a question for me. We attended a webinar and

were given information concerning exclusion from the mandatory purchase

requirement. It stated “The act authorizes the exclusion of detached structures

that are not used for residential purposes from the mandatory purchase of flood

insurance requirement.” We currently have a loan that has the dwelling in zone

“X” but the barn is in zone “AE”.

Do we have to have flood insurance for the barn?

Detached Structures Question

80

Profile of Issue:

HFIAA allows mandatory purchase exemption for certain detached

structures

Three Components Required:

Applies to Residential Property

Detached from primary residential structure

Does not serve as a residence

81

Detached Structures Exemption - HFIAA

Detached

Structures

Talking Points

“(3) DETACHED STRUCTURES. –Notwithstanding any other provision of this

section, flood insurance shall not be required, in the case of any residential

property, for any structure that is a part of such property but is detached from

the primary residential structure of such property and does not serve as a

residence.”

40

Final Joint Regulatory Guidance:

Regulators agree exemption became effective upon enactment.

Exemption addresses concerns on low-value structures

Provides discretionary authority to require coverage

Notice of Special Flood Hazards amended

82


Detached

Structures

Talking Points

“Although you may not be required to maintain flood insurance on all structures, you may still wish to do so, and your mortgage lender may still require you to do so to protect the collateral securing the mortgage. If you choose not to maintain flood insurance on a structure and it floods, you are responsible for all flood losses relating to the structure.”

3 Components – Detached Structures Exemption

83

Applies to a residential property

Purpose of loan is immaterial when residence secures a loan

Broadly defined to include any residential building

A structure that is part of a residential property:

Refers to a property used primarily for personal, family or household purposes

Not commercial, agricultural or other business use

Applies to a “detached” structure

Detached from the primary residential structure

Detached is defined as a building that stands alone

Not joined by any structural connection to the residential structure

Does not serve as a residence

No single bright line test; Focus on structure’s intended use

Rely on good faith determination of lender

Could serve as residence if it generally includes sleeping, bathroom or

kitchen facilities

1

2

3

41

Final Joint Regulatory Guidance:

Further Clarification on “serves as a residence”:

Detached structures can vary greatly

Sleeping, bathroom and kitchen – all three not necessary to

“serve as a residence”

No duty to monitor status of detached structure

Must re-examine on future triggering event

Send borrower notice if lender determines building becomes

subject to mandatory purchase

84


Detached

Structures

Talking Points

85

The e-mailer writes that the dwelling is in Zone X but the barn

is in Zone AE. Can the barn be excluded from the mandatory

purchase requirement?

a. Yes, the dwelling is in Zone X; no flood insurance is required

b. No, buildings in Zone AE cannot use the exemption

c. Yes, the loan meets all three required components of the

exemption

d. No, only residential buildings with sleeping, kitchen and

bathroom facilities can use the exemption

e. I don’t have enough information

Poll Question #3

42

86

6/1/2018 86

Ask The Expert

Detached Structures Exemption

Q: If a commercial loan is secured by a personal guaranty

provided by the principal owner of a commercial entity, with

a mortgage on his or her residence, may a detached

structure on the residential property be eligible for the

exemption?


Exemption applies regardless of the purpose of the loan*

Just so long as a residential property is secured

Affordability issues are the same

Exemption only a remedy for residential properties and not commercial, business or agricultural

Homeowner Flood Insurance Affordability Act not Business or Farm owner

*NOTE: Escrow requirement – only consumer loans

87


Detached

Structures

Talking Points

43

88

6/1/2018 88

Ask The Expert


Q: If one of our borrowers currently has a flood policy on a

detached structure that meets the exemption’s

requirements, can we cancel our requirement for flood

insurance? Can our borrower cancel their policy and get a

refund?


Borrower is no longer required by statute to have flood insurance on a building(s) meeting the exemption’s requirements

Lender may rescind its flood insurance mandate

For safety and soundness, lender may want to continue coverage mandate on higher valued detached structures

NFIP policies can be cancelled mid-term with cancellation effective the date the cancellation request and supporting documentation are received by insurance carrier

Documentation: Signed statement from policyholder that policy no longer required by lender for a “detached structure”

89


Detached

Structures

Talking Points

44

90 CASE FILE

Topic 5

1. Applies to property used

primarily for personal, family or

household purposes.

2. Lenders can exercise discretion

in their use of the exemption.

3. To be exempted the detached

structure may not serve as a

residence.

91 CASE FILE NOTES

45

Topic 6

INSURABLE VALUE 92

93

What do you most often use to determine Insurable

Value at your lending institution?

a. We make the insurance agent/carrier determine it.

b. We take the coverage amount from the hazard policy.

c. We use an appraised value.

d. We use a residential or commercial cost estimator.

e. We use a method not listed here.

Poll Question #4

46

Calculating Insurable Value

94

Calculating Insurable Value

98

47

Replacement Cost Value

Cost to repair or replace a building

Material of similar kind and quality

No deduction for depreciation

RCV does not include land values

RCV is not “market value”

RCV vs. ACV

99 Calculating Insurable Value

Actual Cash Value

Cost to replace an insured item of

property at time of loss

Less the value of its physical

depreciation

Based on age, wear and tear

Replacement cost less

depreciation

RCV vs. ACV

100 Calculating Insurable value

48

Types of Policies

101 Which to use? What’s the purpose of the structure?

Applies to:

Residential building

for 1 to 4 families

Also applies to:

Individual condo units

Manufactured homes

Renters (for contents)

102

Dwelling Form

49

Replacement Cost Loss Settlement

Building Coverage Only

Single Family Dwellings

Principal Residence

Properly Insured to Value

80% of RCV

Max Limit Available

103 Dwelling Form

Actual Cash Value Loss Settlement

2 – 4 Family Dwellings

Mobile Homes

<16 ft wide and 600 sq. ft.

Single Family

Not insured to value

Not principal residence

Contents

Detached Garage

10% extension

104 Dwelling Form

50

Actual Cash Value Loss Settlement

Residential (More than 4 families)

Non-residential buildings

Office buildings

Schools, churches

Farm buildings

Industrial buildings

Warehouses

Hotels < 6 months

Mixed-use buildings – less than

75% residential

105 General Property Form

Replacement Cost Loss Settlement**

Replacement Cost Loss

Settlement**

Buildings owned by condo

associations

75% of floor area residential

High rise buildings

Low rise buildings

Townhouse/Rowhouse

Detached single family condos

106 Residential Condominium Building Association Policy

** Subject to co-insurance penalty if not properly insured to value.

51

Replacement Cost Value (RCV)

107

Single Family Dwelling

Principal Residence

Insured to Value

Residential Condo Buildings

RCBAP Coverage Form

Insured to Value

Replacement Cost Loss Settlement Summary

RCV

Actual Cash Value (ACV)

108

Everything

Else

Actual Cash Value Loss Settlement Summary

52

Appraisal based on cost-value

approach

Reconstruction cost

Reconstruction less depreciation

Insurable Value

109

Final Answer

Insurance value approaches/methods

Final Answer


approach

Construction-cost calculation

Residential cost estimators

Commercial cost estimators

“Google” on Internet

Industry leader obvious

Replacement cost calculations

Depreciated values

Insurable Value

110 Insurance value approaches/methods

53

Final Answer


approach


Insurable value used in hazard

policy

Insurable Value


Final Answer


approach


Insurable value used in hazard

policy

Any other reasonable approach

that can be supported

Insurable Value


54

113 CASE FILE

Topic

6

1. No one single solution to

calculating insurable value.

2. NFIP losses are typically settled on

either an Actual Cash Value or

Replacement Cost Value basis.

3. Regulators have defined a series

of approaches to defining insurable

value.

114 CASE FILE NOTES

55

RESOURCES 124

Topic 7

www.fema.gov/national-flood-insurance-program

National Flood Insurance Program Home Page

125

http://www.fema.gov/national-flood-insurance-program







56

NFIP Flood Insurance Manual

Access the NFIP Flood

Insurance Manual:

Online at the Flood

Insurance Library: http://www.fema.gov/flood-insurance-manual

126

Links to Final Rule

Loans in Areas Having Special Flood Hazards (June 2015)

http://www.occ.gov/news-issuances/news-releases/2015/nr-ia-

2015-89a.pdf

127

http://www.fema.gov/flood-insurance-manual





http://www.occ.gov/news-issuances/news-releases/2015/nr-ia-2015-89a.pdf












57

Links to Interagency Q&As

Interagency Q & As Regarding Flood Insurance (July 2009)

http://edocket.access.gpo.gov/2009/pdf/E9-17129.pdf

Interagency Q & As Regarding Flood Insurance (October 2011)

http://www.gpo.gov/fdsys/pkg/FR-2011-10-17/pdf/2011-

26749.pdf

128

Proposed Rule: Private Flood Insurance

129

Federal Register Publication: Click Here




http://www.gpo.gov/fdsys/pkg/FR-2011-10-17/pdf/2011-26749.pdf









https://www.gpo.gov/fdsys/pkg/FR-2016-11-07/pdf/2016-26411.pdf

58

www.msc.fema.gov

Visit the Map Service Center

130

Evaluations - Online

131

All attendees will be receiving an email with a link to a survey

and feedback form. Please take time to complete and help

us improve our training effort!

Presented by:

http://www.msc.fema.gov/

59

Training Information

132

Rich Slevin [email protected]

Mike Moye [email protected]

Melanie Graham [email protected]

Rich Waalkes [email protected]

Aaron Montanez [email protected]

Like us on Facebook at:

www.facebook.com/floodcomplianceforum

133 Any views or opinions presented in this webinar are solely those of the speakers. They do not represent

the Federal Emergency Management Agency (FEMA), The National Flood Insurance Program (NFIP),

any Federal Entity for Lending Regulation or Government Sponsored Enterprise (GSE).

Always consult your regulatory entity for definitive guidance.

mailto:[email protected]





http://www.facebook.com/floodcomplianceforum

http://www.facebook.com/floodcomplianceforum

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Flood Compliance by the Case - H2O Partners€¦ · 1 1 Flood Compliance by the Case A CASE STUDY APPROACH FOR LENDERS Presented by: Here’s our agenda for today 3 Topic 1: Private