Flood zones continue to change over time. The Federal Emergency Management Agency (“FEMA”) continuously updates maps through its Flood Map Service Center (MSC) that insurers and lenders rely upon in determining whether borrowers are required to purchase flood insurance. The FEMA Flood Map Service Center contains current maps, and may be accessed here.
The determination of whether flood insurance is required is not set in stone at the time a loan is applied for, or even at the time of the closing. Mortgage lenders now include flood insurance notices in their loan document packages. These notices, which borrowers are required to sign, inform borrowers that they may not need flood insurance now, but the flood plain is always subject to change. In that event, if the house later lies within the flood zone, the lender can require a flood insurance policy for the property. So, even if this happens years after the closing, lenders are permitted to require borrowers to obtain flood insurance. And, if the borrower does not obtain a policy, the lender has to right to obtain it, and charge the borrower for the privilege.
In 2013, FEMA made significant changes to the maps. These changes more than doubled the number of homes in the Boston area requiring flood insurance. These changes caught many homeowners by surprise, and the homeowners had little or no recourse. Given the ever-increasing cost of flood insurance, when shopping for a home, it is worthwhile to assess the likelihood of the flood maps changing, and including the property. Low-lying lots, or lots in close proximity to water are always the most susceptible to changes. Do your homework, and know the risks involved before purchasing.
For more information, contact Brooks & Crowley, LLP.