A borrower is purchasing a home with a federally regulated loan in a Special Flood Hazard Area (SFHA). The loan amount is $180,000 and the building value is $150,000. What is the minimum flood insurance coverage required?
Correct Answer
A) $150,000
Under the Flood Disaster Protection Act, the minimum required flood insurance coverage is the lesser of the outstanding principal balance of the loan, the insurable value of the building, or the maximum amount of coverage available under the NFIP. In this case, the building value of $150,000 is less than the loan amount.
Why This Is the Correct Answer
Under the Flood Disaster Protection Act, the minimum required flood insurance coverage is the lesser of the outstanding principal balance of the loan, the insurable value of the building, or the maximum amount of coverage available under the NFIP. In this case, the building value of $150,000 is less than the loan amount.
More Federal Laws Questions
A mortgage broker's website states 'Qualified borrowers can get loans with down payments as low as 3%.' Which statement about TILA advertising requirements is correct?
A loan's APR increases from 4.25% on the Loan Estimate to 4.35% on the Closing Disclosure due to a rate lock expiration. What action is required?
A lender originates a mortgage that meets all QM requirements. Three years later, the borrower defaults and claims the lender violated the ATR rule. What legal protection does the lender have?
For a closed-end mortgage loan, when must the creditor provide the Closing Disclosure to the borrower?
Which of the following documents must be provided to trigger the start of the 3-day rescission period?
People Also Study
General Mortgage Knowledge
23% of exam
Mortgage Loan Origination Activities
25% of exam
Ethics, Fraud & Consumer Protection
17% of exam
Uniform State Test Content
12% of exam