A borrower provides a flood insurance policy with a $150,000 building coverage limit for a property with a $200,000 outstanding loan balance. The property's replacement cost is $300,000. What is the minimum acceptable coverage?
Correct Answer
B) $200,000 - equal to the loan amount
The Flood Disaster Protection Act requires flood insurance coverage equal to the lesser of the outstanding loan balance, the maximum NFIP coverage available ($250,000 for residential buildings), or the insurable value. In this case, $200,000 (loan balance) is the minimum required.
Why This Is the Correct Answer
The Flood Disaster Protection Act requires flood insurance coverage equal to the lesser of the outstanding loan balance, the maximum NFIP coverage available ($250,000 for residential buildings), or the insurable value. In this case, $200,000 (loan balance) is the minimum required.
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?
Which of the following documents must be provided to trigger the start of the 3-day rescission period?
For a closed-end mortgage loan, when must the creditor provide the Closing Disclosure to the borrower?
Which information is NOT required to be included in an AfBA disclosure?
A lender quotes an APR of 4.25% on a mortgage loan, but the actual APR calculation results in 4.28%. Under TILA's APR accuracy tolerance, is this disclosure compliant?
Which of the following fees would NOT be included in the finance charge calculation under TILA?
For a purchase money mortgage with a loan amount of $400,000, which of the following represents the correct method for calculating the APR?
A servicer receives a borrower's written request for payoff information on Monday. The borrower needs the information for a refinance closing scheduled for the following Friday. When must the servicer provide an accurate payoff statement?
A lender provides a borrower with initial TILA disclosures showing an APR of 4.5%. Due to market changes, the final APR at closing is 4.625%. What disclosure requirement applies?
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
Related Study Resources
Previous Question
A mortgage company uses an automated underwriting system that flags applications from certain ZIP codes for additional review. The company argues this is based on property values, not demographics. Under Regulation B:
Next Question
Under HMDA, which of the following data points is NOT required to be collected and reported?