A borrower's flood insurance policy has a $5,000 deductible, which exceeds what the borrower can afford. The borrower requests to reduce the coverage amount to lower the premium. How should the lender respond?
Correct Answer
A) Allow the reduction if it maintains minimum required coverage
The Flood Disaster Protection Act only requires minimum coverage amounts (outstanding loan balance, maximum NFIP coverage, or insurable value). Deductible amounts do not affect the coverage requirement, and lenders may allow reductions as long as minimum coverage is maintained.
Why This Is the Correct Answer
The Flood Disaster Protection Act only requires minimum coverage amounts (outstanding loan balance, maximum NFIP coverage, or insurable value). Deductible amounts do not affect the coverage requirement, and lenders may allow reductions as long as minimum coverage is maintained.
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A borrower receives a Loan Estimate showing a total of loan costs of $8,000. At closing, the actual total loan costs are $8,500. Under TILA tolerance rules, what is the maximum amount the borrower can be charged without triggering a cure requirement?
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