While at a recent compliance training, the instructor stated that a standard flood hazard determination (SFHD) is required when making, increasing, renewing, and extending a loan. That being said, I know SFHD are good for 7 years. Am I interpreting the regulation that even though the SFHD has a 7 year term if you are making, increasing, renewing, or extending a loan you should still run a new flood determination?
You may rely on a previous determination, for up to 7 years, using the SFHDF when you are increasing, extending, renewing, or purchasing a loan secured by a building or a mobile home. However, the "making" of a loan is not listed as a permissible event that permits you to rely on a previous determination. So if the bank is increasing, renewing, and extending credit, then it is possible that you may rely on a previous determination using the SFHDF as long as the original determination was made not more than seven years before the date of the transaction, the basis for the determination was set forth on the SFHDF, and there were no map revisions or updates affecting the security property since the original determination was made. However, you must obtain a new determination using a new SFHDF, when "making" a loan. See Question and Answer number 68 from the 2009 Interagency Questions and Answers Regarding Flood Insurance https://www.federalregister.gov/d/E9-17129/p-443.
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