Flood Determination error

[delapj]

What is the name of your state? Iowa

I purchased a house about 9 months ago. The Motgage company originally perfomed a flood search and determined that the property was not in a flood zone. Upon review the Morgage company, for some unknown reason, requested an additional flood search and revised their determination that the property is in a flood zone and is requiring me to provide flood insurance. The flood determination was made by the same entity, and both reflect the same supporting information (ie. fema map) as support of their findings. The mortgage company has admitted verbally to my banker that they have made a mistake, and that the property has always been in a flood plane. What recorse do I have?

Also, the former owner did not disclose the flood issue on their disclosure, and after further conversations I found that they had prior knowledge.

I would not have purchased this property if I knew it was in a flood zone. Can I get out of the sale and submit a claim for actuall damages?

Help

[moburkes]

Originally Posted by delapj

What is the name of your state? Iowa

I purchased a house about 9 months ago. The Motgage company originally perfomed a flood search and determined that the property was not in a flood zone. Upon review the Morgage company, for some unknown reason, requested an additional flood search and revised their determination that the property is in a flood zone and is requiring me to provide flood insurance. The flood determination was made by the same entity, and both reflect the same supporting information (ie. fema map) as support of their findings. The mortgage company has admitted verbally to my banker that they have made a mistake, and that the property has always been in a flood plane. What recorse do I have?

Also, the former owner did not disclose the flood issue on their disclosure, and after further conversations I found that they had prior knowledge.

I would not have purchased this property if I knew it was in a flood zone. Can I get out of the sale and submit a claim for actuall damages?

Help

The mortgage company would require a flood policy to protect THEIR interests, not yours. To protect YOUR interest, you could have had a flood search done on your own.

[delapj]

mobukes,

The mortgage company performs a flood search because they are required to by law. They did not perform the searches prior to the enactment of the National Flood Insurance Act. Consumers rely on the Mortgage Broker to due their due diligence and provide what is required by law at the time it is required. The Mortgage Broker clearly failed to provide what is required, and is subject to fines. The question I have is more a matter of presedence in Iowa rather than an uneducated response.
On the second point, I concede I could have had a flood search provided to me. But beings that I am on a hill, and the former owner declaired that the property was not in a flood zone, I did not feel it was necessary to perform a search. I relied on the disclosure and that all parties were acting in good faith, and that was not the case.
Do you have any advice or just playing monday morning quarterback?

Thanks for trying.

[moburkes]

I'll take my 10+ years of insurance experience in 35+ states, elsewhere, then. That experience also includes flood insurance. That experience also includes IA.

[delapj]

If that is all you have to offer then yes you should. I expect more out of 10 years experience in 35 states. Come on....

[moburkes]

Originally Posted by delapj

If that is all you have to offer then yes you should. I expect more out of 35 years experience in 35 states. Come on....

35 years experience?

[Ozark_Sophist]

Is this something a mortgage company would pick up themselves? I ask because when I bought my current property, both the home inspector and the appraisal people independently examined the flood maps and determined my property is not in a flood plain*. The appraisal people are supposed to be 'firewalled' from the mortgage people to prevent fraud (enhanced appraisal to get loan approval). Would they have errors and ommissions insurance for an error like this?

*it could be the unique nature of my property. I have a private pond that my house literally sits over the edge of (I can fish through the french doors while reclining in my lazy boy ). When it rains hard, my house becomes an island but half of missouri would flood before my house does. The picture threw the mortgage people off.

[delapj]

Good question. I have checked the appraisal I have on the property, and they did not pick up on the flood information either. I will contact them to see what their position is.

I also checked with the FEMA flood map and my property is clearly in the flood hazard area.

Thanks

[moburkes]

Originally Posted by Ozark_Sophist

Is this something a mortgage company would pick up themselves? I ask because when I bought my current property, both the home inspector and the appraisal people independently examined the flood maps and determined my property is not in a flood plain*. The appraisal people are supposed to be 'firewalled' from the mortgage people to prevent fraud (enhanced appraisal to get loan approval). Would they have errors and ommissions insurance for an error like this?

*it could be the unique nature of my property. I have a private pond that my house literally sits over the edge of (I can fish through the french doors while reclining in my lazy boy ). When it rains hard, my house becomes an island but half of missouri would flood before my house does. The picture through the mortgage people off.

If you turn on your PMs, I'll respond.

[Ozark_Sophist]

See if that works.

OP - I don't see you getting out of the house, particularly nine months later. The orginal owners have long since moved on. The bank is not in the home owning buisness.

I had another thought - what about title insurance?

[HUD-1]

One more point. Just make sure that the flood maps were not updated AFTER the appraiser and lender did their original checks. I know lenders are required to periodically check flood map determinations just in case maps are updated...

[delapj]

I'm not looking to get out of the house. I love the location, and the house is fine. I just don't want to have to pay for flood insurance when it is not necessary, and I do not want to loose money when I go to sell it because of an error on someone elses part.

I thought about title insurance, but I don't believe that covers this issue.

I have checked the mapping. Both flood deteriminations used the same map as supporting documentation. Therefore not a map update issue.

Here is an update. The Mortgage company has admitted their failure to do due diligence, and is looking to negotiate. They have not made any offer yet, but I am told they will entertain paying flood insurance premiums themselves for the duration of the note. That still does not help with the diminished property value, now that it is "in a flood hazard zone".

The interesting thing is, my neighbor's house is situated such that their lowest floor is below mine, and their house is not located in the flood hazard area according to the FEMA map. I know they are lower because I have a lazer transit and took measurements. Might be a FEMA error. Imagine that.

Also, I have checked with the county recorders office, and this property has never been noted as being in a special flood hazard area until now, and the city map doesn't have this property listed on their flood map either.

[efflandt]

Did you actually get a firmette from [url]http://www.fema.gov/hazard/flood/index.shtm[/url] and see what that shows? I did that to see for myself when my original lender suddenly asked if I had flood insurance during a refi. My circa 1910 home does not even have or need a sump pump. My city overlaps 2 counties and they apparently had gotten a report for the wrong county.

It is also possible that there have been elevation changes (fill) that might not be reflected by the maps. Our office/warehouse is in a flood plain, and while the front street has been underwater (still driveable), a vast area would have to accumulate 5 feet of water before it would approach our building, which it has not done in the 33 years it has been there.