A borrower refinances a loan on property in an SFHA. The existing flood insurance policy was purchased 3 years ago and has 2 years remaining. What must the lender verify regarding this policy?
Correct Answer
A) That the policy premium is current and coverage meets requirements
For refinancing transactions in SFHAs, the Flood Disaster Protection Act requires lenders to verify that existing flood insurance policies are current (premiums paid) and meet minimum coverage requirements. The age of the policy or type of carrier is not relevant as long as coverage is adequate.
Why This Is the Correct Answer
For refinancing transactions in SFHAs, the Flood Disaster Protection Act requires lenders to verify that existing flood insurance policies are current (premiums paid) and meet minimum coverage requirements. The age of the policy or type of carrier is not relevant as long as coverage is adequate.
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