Flood Insurance: Wet vs. Dry Funding

Are you familiar with the terms “wet funding” and “dry funding” as it relates to flood insurance? And, more specifically, how it affects when flood insurance must be in place? The Flood Insurance FAQs point out that the Regulation states that a lender cannot “make” a loan secured by a property in an SFHA without adequate flood insurance coverage being in place. A lender should use the loan “closing date” to determine the date by which flood insurance must be in place for a designated loan. FEMA deems the “closing date” as the day the ownership of the property transfers to the new owner based on State law. The “closing date” is dependent on whether you are a “wet funding” or “dry funding” State.

David explains more in the video.

Video Highlights:

• David discusses the differences between wet funding and dry funding states.
• Wet and dry funding comes into play when there is a title transfer.
• "Dry-funding" states typically include Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon and Washington; however some of these may still require wet or dry fundings depending on the jurisdiction.

Published
2023/08/11