502.03

Flood Insurance

502.03A

Generally

Operating Procedures

To determine if any buildings located at the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). are, or will be, fully or partially located in an SFHA SFHASpecial Flood Hazard Area designated by FEMA. , you must:

  • use the FEMA FEMAFederal Emergency Management Agency Standard Flood Hazard Determination Form (SFHDF);
  • evaluate all Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). structures when ordering the SFHDF;
  • provide the vendor supplemental Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). information including the
    • legal description, and
    • survey or site plan;
  • obtain an image overlay from Flood Vendor;
  • ensure the resulting Flood Zone Determination (FZD) form, and any subsequent FZD forms, are effective for the entire Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 term; and
  • retain a signed copy in your Servicing File Servicing FileYour file for each Mortgage Loan serviced. .

Requirements

You must ensure the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). has flood insurance if:

  • any income-producing Improvements ImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). or any non-income producing Improvements ImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). that support amenities are in an SFHA Zone SFHA ZoneSpecial Flood Hazard Area designated by FEMA. starting with the letter A or V; or
  • the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is located within a Coastal Barrier Resources System (CBRS) or Otherwise Protected Area (OPA), regardless of if the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is located in an SFHA SFHASpecial Flood Hazard Area designated by FEMA. .

A Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 is ineligible for purchase if the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is in:

  • an SFHA SFHASpecial Flood Hazard Area designated by FEMA. ; and
  • a community that does not participate in the NFIP NFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. .

You must:

  • complete the most recent version of the Standard Flood Hazard Determination Form issued by FEMA FEMAFederal Emergency Management Agency ;
  • retain in your Servicing File Servicing FileYour file for each Mortgage Loan serviced. a
    • copy of the form, and
    • signed copy of Notice to Borrower of Special Flood Hazard and Federal Assistance;
  • require the determination firm, and any monitoring company, to notify you whenever there is a flood zone change; and
  • ensure the coverage:
    • meets the minimum mandatory purchase requirements per:
      • the following Federal flood insurance statutes, as amended and/or restated from time to time, including the:
        • National Flood Insurance Act of 1968 (1968 Act);
        • Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert Waters);
        • Flood Disaster Protection Act of 1973 (FDPA); and
        • Homeowner Flood Insurance Affordability Act of 2014; and
      • any applicable Federal agency rulemaking and publication; and
    • equals at least 100% of the Insurable Value Insurable ValueFor any Property, the estimate of the maximum dollar amount needed to replace, repair, or reproduce the Property, but excluding any land value. of
      • the first 2 floors above grade, and
      • any Improvements ImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). below grade;
  • require contents coverage for Borrower BorrowerPerson who is the obligor per the Note. -owned personal property;
  • ensure you have an established process to obtain an inventory and the Insurable Value Insurable ValueFor any Property, the estimate of the maximum dollar amount needed to replace, repair, or reproduce the Property, but excluding any land value. of Borrower BorrowerPerson who is the obligor per the Note. -owned contents or business personal property within buildings located in SFHAs SFHAsSpecial Flood Hazard Area designated by FEMA. to determine required coverage; and
  • retain documentation of the presence or absence of Borrower BorrowerPerson who is the obligor per the Note. -owned contents or business personal property within the building and in your Servicing File Servicing FileYour file for each Mortgage Loan serviced. .

Guidance

Generally, contents or business personal property:

  • includes equipment and inventory
    • owned by the Borrower BorrowerPerson who is the obligor per the Note. , and
    • used in connection with Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code).
      • ownership,
      • management, or
      • operation; and
  • does not otherwise constitute fixtures.
502.03B

Deductibles

Requirements

You must comply with the following tables.

Flood Maximum Deductibles
For... You must ensure the...
Business income insurance

deductible does not exceed:

 

  • when expressed as a number of days, 15 days; or
  • when expressed as a dollar amount, $100,000.
NFIP policies maximum deductible available under NFIP NFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. is acceptable.

 

Private Flood Policy Maximum Deductibles
If the Property has... The maximum deductible is...
10 or fewer buildings in SFHA $50,000 per building.
More than 10 buildings in SFHA $500,000 per occurrence.
502.03C

NFIP Policy

Requirements

You must comply with the following table.

NFIP and Excess Flood Coverage
If... Then...
Coverage available under the NFIP is insufficient the Borrower BorrowerPerson who is the obligor per the Note. must purchase excess flood insurance covering the difference, up to the required coverage amount.

Per elevation certificates completed by a licensed land surveyor, engineer, or architect:

 

  • any of the building's Lowest Adjacent Grade (LAG) are above Base Flood Elevation (BFE); and 
  • the Borrower confirms application for a Letter of Map Amendment (LoMA)
  • only NFIP NFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. insurance is required for those buildings, and
  • the maximum term for only NFIP NFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act.  insurance is 12 months.

To remove a Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). /building from an SFHA SFHASpecial Flood Hazard Area designated by FEMA. , only an updated FEMA FEMAFederal Emergency Management Agency Standard Flood Hazard Determination Form (SFHDF) based on the following is acceptable:

  • Letter of Map Amendment (LoMA);
  • Letter of Map Revision (LoMR); or
  • Letter of Determination Review (LoDR).

If a LoMA was previously declined, you must ensure the Borrower BorrowerPerson who is the obligor per the Note. is reapplying due to:

  • new or corrected elevation data;
  • a Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). change or additional documentation; or
  • updated information to address a previous declination.

During the LoMA process:

  • only NFIP NFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. insurance is required provided the declination was not based on a fundamental issue (such as the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). being located below the Base Flood Elevation (BFE)); and
  • the maximum term for NFIP NFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. insurance is 12 months.

If any Improvements ImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). are reclassified as within an SFHA Zone SFHA ZoneSpecial Flood Hazard Area designated by FEMA. starting with the letter A or V after you Deliver DeliverSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. the Mortgage Loan Mortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 , you must require the Borrower BorrowerPerson who is the obligor per the Note. to obtain compliant flood insurance.

Guidance

To prevent the Borrower BorrowerPerson who is the obligor per the Note. from paying for more coverage than an NFIP NFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. policy would pay out, you should evaluate the extent of recovery allowed under the NFIP NFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. policy for the type of building being insured.

If all buildings do not require flood insurance, but the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ingress is located in an SFHA SFHASpecial Flood Hazard Area designated by FEMA. , you should consider requiring business income insurance for excess flood to cover all buildings.

Flood insurance is not required if only unimproved portions of the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , or non-income producing Improvements ImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). that do not support amenities at the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , are located in an SFHA SFHASpecial Flood Hazard Area designated by FEMA. . 

Non-Income Producing Improvements
Supporting amenities include... Not supporting amenities include...
  • clubhouses, and
  • pool houses.
  • sheds,
  • pump houses, and
  • storage buildings.

Business income insurance is not required for non-income producing Improvements ImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). . 

You should consider that

  • conditions may change over time, and
  • flood zones may be remapped. 

You or Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! may require flood insurance for Improvements ImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). outside an SFHA Zone SFHA ZoneSpecial Flood Hazard Area designated by FEMA. starting with the letter A or V, but within an area designated by FEMA FEMAFederal Emergency Management Agency as Zone X or Zone D (for example, if a Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). location is subject to flooding due to storm water, or within close proximity to an SFHA SFHASpecial Flood Hazard Area designated by FEMA. boundary).

The acceptable deductible for excess flood insurance is the coverage limit of the underlying NFIP NFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. policy.

Elevation certificates are not valid to determine if Improvements ImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). are in an SFHA SFHASpecial Flood Hazard Area designated by FEMA. . 

You should:

  • obtain flood zone determinations from qualified third-party flood-zone determination firms; and
  • exercise care and sound judgment when selecting the firm.

Operating Procedures

You must:

  • obtain life-of-loan monitoring for each Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). from a third-party flood-zone determination firm;
  • complete FEMA's FEMA'sFederal Emergency Management Agency Standard Flood Hazard Determination form to determine if any Improvements ImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). are located in an SFHA SFHASpecial Flood Hazard Area designated by FEMA. ; and
  • retain in your Servicing File Servicing FileYour file for each Mortgage Loan serviced. :
    • a completed copy of the form;
    • a signed copy of the Notice to Borrower of Special Flood Hazard and Federal Assistance (included in the Flood Determination Certificate); and
    • if you permitted a reduced amount of excess flood insurance,
      • your analysis, and
      • related documentation supporting the economic feasibility and reduction amount.
502.03D

Private Flood Policy

Requirements

You must ensure a private flood insurance policy:

  • is written on a Replacement Cost Valuation basis without any deduction for depreciation; and
  • provides coverage and terms as broad as or better than the coverage and terms provided under a standard flood insurance policy issued under the NFIP NFIPProgram of flood insurance coverage and floodplain management administered under the National Flood Insurance Act. .