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What this task is

This task collects the subject property’s flood insurance policy when the property is located in a special flood hazard area. The policy should show:
  • The insured property address,
  • Coverage limits and types, and
  • The annual or monthly premium and policy term.
The document is used to confirm that required flood coverage is in place and to support accurate calculation of the borrower’s housing expenses.

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When this task is required

This task is required when:
  • The subject property is identified as being in a special flood hazard area, and
  • Flood insurance is required by regulation, investor guidelines, or lender policy.
It is relevant for both purchase and refinance loans wherever mandatory flood coverage applies.

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Why this task is required

Flood risk is a material factor in the safety and soundness of a mortgage loan:
  • Federal regulations and many investors require flood insurance when a property lies in certain flood zones.
  • The flood premium is part of the borrower’s PITIA (see PITIA), affecting affordability and DTI ratios.
  • Adequate coverage protects both the borrower and lender from catastrophic loss due to flooding.
Without clear documentation of flood coverage, the lender may be out of compliance with federal requirements, and the loan could be ineligible for sale or delivery.

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Documents needed to resolve this task

To satisfy this task, provide:
  • The current flood insurance policy or declarations page for the subject property:
    • Showing property address, insured parties, coverage limits, deductible, and effective dates.
    • Displaying the annual premium or sufficient information to derive the cost.
  • If flood coverage is provided under a master or association policy, provide:
    • The relevant portion of the master policy that applies to the unit or building.
    • Any evidence of coverage letters or certificates that tie the subject property to the master policy.
These documents allow the underwriter to confirm both regulatory compliance and accurate inclusion of flood expenses in the borrower’s total housing cost.