How Servicers Can Address Flood Insurance Issues

Elly Leonida

Elly Leonida is First Vice President and Operations Manager with LERETA, Los Angeles. Prior to LERETA, she worked for Pinnacle Data Corp., which was acquired by First American. She started as a flood searcher at Pinnacle and become a flood searching supervisor and advanced to a customer service supervisor.

Floods are among earth’s most common and most destructive natural hazards. No other kind of natural disaster in America has caused more disruption or destruction than floods. Today’s regulatory environment can move as fast as flood waters. Helping borrowers find opportunities to reduce or even remove their flood insurance starts with understanding all of the basics around this ever-changing area.

Let’s go back to school this fall and learn Flood 101 to be empowered to assist borrowers with this important risk mitigation.

The Federal Emergency Management Agency changes their maps approximately twice a month to reflect the many types and levels of changes. That’s a lot of changes to manage for borrowers who may have flood insurance. Changes are made to flood maps to better reflect the current flood risk. These flood map changes can be initiated by private citizens (residents or their representatives), community officials or by FEMA. Flood map are changed through Letters of Map Amendment. FEMA issued approximately 35,137 unique LOMA cases in 2018, which equaled to 201,952 unique property addresses, that’s a lot of changes.

Lesson 1: What are FEMA Flood Maps?

FEMA uses the most accurate flood hazard information available and applies community information in developing the Flood Insurance Rate Maps. However, because of limitations of scale or topographic definition of the source maps used to prepare a FIRM, areas may be inadvertently shown within an SFHA on a FIRM even though the property is on natural ground and is at or above the elevation of the 1-percent-annual-chance flood. This elevation is referred to as the base flood elevation.

For other areas, fill may have been placed during construction, thereby elevating a small area within the Special Flood Hazard Area to an elevation that is at or above the BFE. 

Lesson 2: What are Letters of Map Amendments (LOMA)

A Letter of Map Amendment is an official FEMA document that changes or corrects the flood zone for your structure. This is used to revise the Special Flood Hazard Area boundary based on detailed elevation surveying and/or topographic mapping of natural conditions. If the home site and the lowest floor of the building, lowest adjacent grade (including basement or garage) is above the BFE, FEMA can amend the map to remove the structure and other land area from the SFHA. These letters are dated and sent to the applicant and are also filed with the city or county where the property is located. It can move a property from a high-risk zone to a low-risk zone. Once in a low-risk zone, the premiums could be reduced by 90% or more by getting a Preferred Risk Policy. In addition, with a LOMA, the mandatory insurance can be dropped altogether.

The elevation certificate is an administrative tool used by the NFIP. It provides elevation information necessary to ensure compliance with community floodplain management ordinances; to determine the proper insurance premium rate; and/or support a request for a LOMA to remove a building from the special flood hazard area.

An EC must be prepared and certified by a licensed land surveyor, registered professional engineer or architect who is authorized by commonwealth, state or local law to certify elevation information. Community officials who are authorized by local law or ordinance to provide floodplain management information may also sign the certificate.

A LOMA application and EC need the following documentation and others not listed depending on the structure type:  date of construction, copy of the deed, plat map for the property with recordation data from the community, other suitable maps or surveys showing the property relative to locals streets and watercourses. The maps should include at least one street intersection that is shown on the FIRM flood map along with the six-digit community number and panel info with title block. 

When a LOMA is issued removing a building site from the SFHA, the mandatory flood insurance purchase requirement is lifted. However, the lender always has the option of requiring flood insurance. Once the flood zone has been changed to B, C or X, the building qualifies for a “preferred” risk policy, the least expensive flood insurance available.

Lesson 3: Obtaining a LOMA

FEMA does not charge a fee to review a LOMA request. FEMA’s LOMA application can be used by an individual property owner or owner’s agent to request that FEMA remove a single residential structure.

FEMA may take up to 60 days to review the mailed documentation and respond.

Lesson 4: What is an eLOMA?

FEMA has designed a web-based tool specifically for licensed land surveyors and professional engineers (referred to as licensed professionals or LPs) and FEMA approved the National Flood Association and certified professionals to submit selected LOMA requests, known as an electronic Letter of Map Amendment. To become a CP, an applicant must be a Certified Floodplain Manager and must be employed by an NFA member company in good standing that is participating in the eLOMA program. The applicant will need to review certain reference and training materials, successfully pass an online assessment and complete the registration information. Once registered and approved, the CP will be provided login information to access the eLOMA tool. 

The eLOMA tool is designed to replace the traditional standard LOMA process by allowing users to expedite LOMA requests. There is no fee to use the eLOMA tool or receive an eLOMA determination.

The average cost of flood insurance is $600 for a one-year premium. Homeowners can pocket this money if they are successful in getting their flood insurance waived by a LOMA. Removing a property from a FEMA Special Flood Hazard Area will also increase the home value. If it turns out the home is incorrectly zoned, homeowners can get up to one year of flood insurance premiums refunded. Helping home owners through this process can go a long way in building trust and potentially a customer for life.  

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.orgor Michael Tucker, editorial manager, at