What must a lender do if a borrower refuses to purchase required flood insurance for a property in a Special Flood Hazard Area?
Correct Answer
C) Deny the loan application
Under the Flood Disaster Protection Act, lenders are prohibited from making loans secured by properties in Special Flood Hazard Areas unless flood insurance is obtained. If a borrower refuses to purchase required flood insurance, the lender must deny the loan.
Why This Is the Correct Answer
Under the Flood Disaster Protection Act, lenders are prohibited from making loans secured by properties in Special Flood Hazard Areas unless flood insurance is obtained. If a borrower refuses to purchase required flood insurance, the lender must deny the loan.
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