If your property sits in a 'Special Flood Hazard Area' (SFHA) as determined by government maps, we will likely require you to maintain a flood insurance policy throughout the term of your loan. Flood insurance helps ensure that, if flooding occurs, you have the resources to repair or restore your home—a key concern for both you and us.
Life of Loan Flood Tracking
- We are required to monitor the flood zone status of a property for the entire life of the loan.
- When you take out a loan, we check if your property is in a flood zone.
- If the flood maps change during the term of the loan and your home becomes newly designated in an SFHA, we will notify you—and you may be required to purchase flood insurance at that point.
- This ongoing monitoring is called 'life of loan flood tracking,' and it continues until your loan is paid off.
Who Governs Flood Zones?
- Flood zones are mapped and regulated in the United States by the Federal Emergency Management Agency (FEMA).
- FEMA creates and updates Flood Insurance Rate Maps (FIRMs), which determine flood hazard areas.
- We must use these maps to assess insurance requirements and regulatory compliance.
- Local governments may also provide input or designate zoning overlays, but federal regulations set the baseline standards.
How Flood Zones Change
Flood zones can change over time as FEMA updates its maps.
- Why do zones change? Flood risks evolve due to factors like urban development, changes in drainage systems, new engineering studies, and climate events.
- How do updates happen? FEMA periodically reviews floodplain data and works with local officials, engineers, and the public before releasing updated FIRMs.
- Impact on borrowers: If your property moves into a designated flood zone after a map update, we will notify you of the new insurance requirement. Conversely, if your property is removed from a flood zone, you may no longer be required to keep flood insurance (though you may still choose to maintain coverage).
Key Takeaways
- Flood insurance is generally required for loans on properties in designated flood zones.
- We monitor the flood zone status for the entire life of the loan ('life of loan flood tracking').
- FEMA governs the definition and revision of flood zones.
- Flood zones often change over time due to updates in mapping and environmental factors. Always respond to any notifications from us regarding changes in flood insurance requirements to ensure full compliance and protection.
If you’re unsure whether you need flood insurance, please contact us via email or call (888) 226-8929.
Want to know more? Check out FEMA's website.