A lender uses an automated flood determination service that incorrectly identifies a property as outside an SFHA. The property is actually in a flood zone. Who bears the liability for this error?
Correct Answer
C) The lender, despite using a third-party service
Under the Flood Disaster Protection Act, lenders remain liable for compliance with flood insurance requirements regardless of whether they use third-party services for flood determinations. The lender cannot delegate this regulatory responsibility.
Why This Is the Correct Answer
Under the Flood Disaster Protection Act, lenders remain liable for compliance with flood insurance requirements regardless of whether they use third-party services for flood determinations. The lender cannot delegate this regulatory responsibility.
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