The general rule of thumb is that you can never “waive” flood insurance. If you have a structure located in a Special Flood Hazard Area that secures your loan, you must require the borrower to obtain flood insurance. This is true even if the structure is taken out of an abundance of caution. In other words, if you take it, you play by the rules. That said, there are certain situations where you don’t have to require the borrower to purchase flood insurance. These might include detached garages, detached structures, loan participations, loans under $5,000, etc. Keep in mind; however, that each of these exemptions or exclusions comes with very specific criteria you must meet. For example, if you aren’t going to require flood insurance for a detached structure, you better be certain that the detached structure meets the detached structure definition found in the flood rules.
Jerod explains more in the video.
Published
2024/05/16
