Help! Chase Suddenly Wants Me To Buy Tons Of Flood Insurance!

Reader Nate and his wife recently bought their dream home, which they admit is more modest than most people’s dream homes, for $60,000. During closing, they wrote in their offer “that if the home was found to be in a flood plane we withdrew our offer,” but were happy to find out that the house was, in fact, not in a flood plain. That is, until Chase, decided that their house was in a flood plain after all and is requiring $185,000 in flood insurance.

Nate says:

Approx. 4 Months ago I found my dream home, however, my dream home is more than likely far less extravagant than what most people might consider their dream home, as I’m a recent college graduate and as of 2 months ago, a newlywed. That being said I don’t have much money, but I managed to find a decent older 2 story home that I loved. More importantly my at the time wife-to-be loved it as well. Needless to say we purchased the home as soon as we could.

We were approved in no time to purchase our $60,000 home. We of course chose Chase as our mortgage lender because my wife had previously done all her banking through them and they seemed to have their act together, boy was I ever wrong. We did everything cautiously. We hired a top notch inspector to come out and check everything out, despite the home being 90+ years old everything was in tip top shape, save for a few windows here and there. No problem.

This is where things get interesting. Because of a previous home we had looked at that had fallen in a flood plane we were certain to write in on our offer that if the home was found to be in a flood plane we withdrew our offer. However, we were happy to find that the house was in the clear. We closed on the home May 29th.

One fine day whilst sitting at my dinner table eating lunch with a friend of mine and my soon-to-be wife (at the time), my soon-to-be wife began screaming in the other room (where our mail came in). I ran in to see what the problem was, and there in her hands she held a note from Chase stating that they were “Sad to inform (us) that your home NOW lies in a flood plane and requires flood insurance.” (my own emphasis added) We were shocked and devastated. However, life goes on right?

I went to my insurance agent a few days later to get things taken care of (mere weeks before my wedding). When I went in to talk to him we discovered that chase was demanding we carry $185,000 worth of flood insurance. I was blown away… There was no way i could afford that sort of coverage which came out to be around 200 a month. I immediately began investigating. Within a few days of investigating I discovered that there had been no changes to the FEMA flood maps in my area since 2002, which means there was no way my house had JUST been put in a flood plane, it had been in one all along but Chase failed to tell me so before I closed on the home. I decided to look into how they could make such a mistake, turns out they were using a flood map from 1990 to determine if I was in a flood plane or not… a map that was over 18 years old. How could they do such a thing? I was Irate.

After some talking with some “higher ups” at Chase I agreed I would pay flood insurance on the home at $60,000 worth of coverage which ran me around 45 a month. I only agreed to this because they told me nothing else could be done.

Fast forward 2 months-

I’m now happily married, and I thought things were going great until…

I received yet another letter from Chase stating that we failed to purchase an appropriate ammount of flood insurance and that we needed $185,000 worth of coverage….

I’m at my wits end, I cant afford that much insurance and I never would have purchased the home had i known it was in a flood plane… Its neither my wife or I’s fault that our home is in a flood plane, so how can Chase be doing this to us? Adding that much extra a month to our bills will seriously put us in a financial strain. We both are recent college graduates and both have student loans to repay, hence why we went after such a cheap home. Please help us get this out there and in the public eye.

We took a look at what the Office of the Comptroller of the Currency (the agency that regulates national banks, like Chase) had to say about flood insurance, and we have good news and bad news.

The good news is that you’re only required by law to have as much flood insurance as you have outstanding principal on your mortgage:

At a minimum, the insurance coverage must equal the outstanding principal balance of the loan. Coverage must be obtained and maintained throughout the term of the loan.

The bad news is that if your house really is in the flood plain, there’s not a lot you can do about it. The OCC recommends that you contact FEMA’s Flood Map Assistance Center if you dispute the maps your bank is using.

National banks determine if flood insurance is applicable based on a review of the appropriate flood maps. If you believe that the flood map used by your bank incorrectly identified your property as being in a Special Flood Hazard Area (SFHA), Federal law allows the lender and borrower to jointly apply to the Federal Emergency Management Agency (FEMA) to request a review of the decision.

Visit FEMA’s Flood Map Assistance Center or call them at 1-877-336-2627.

As far as dealing with Chase’s general incompetance, we’re afraid this might be a job for a consumer lawyer.

Answers About Flood Insurance [OCC]
(Photo: mistaken poet )

Comments

Edit Your Comment

  1. thrlsekr says:

    Wow $200 a month? I’m in Florida and Flood Insurance for $150,000 home is only $350 a year!

    • wiIdcatlh says:

      @thrlsekr:

      Pretty much what I was thinking. I live in Florida, in a flood zone, the house is worth $440k, and I pay $445 a year in flood insurance.

  2. sir_eccles says:

    But all it says is “Volcano insurance” over and over again.

  3. Darkfalz says:

    Is the HOUSE in the flood plain, or just part of the property?

    I had a neighbor who had the same thing happen to him when he went to refinance.

    We looked into it, and found that FEMA considered our 1 year old house also in a flood plain, but neither our insurance or mortgage broker has ever said anything.

    Not wanting to have it come and bite us on the butt, we looked into what we could do.

    We ended up paying a surveyor $400 to come out and check the survey and certify that while a part of our property was in the flood plain, the house itself was outside it.

    Then we filed a “LOMA” which is a map review based on the surveyor’s findings and FEMA ended up changing their map to move us outside the defined flood plain.

    If the house IS in a flood plain, I think a lawyer is your best bet.

  4. describe_one says:

    I hate to say it, but it looks like your best recourse is to file a complaint in the court.

    A judge will be a lot fairer to you than Chase will in mediating this case. They did close the deal by misleading you; giving the excuse of using a 1990 flood map won’t fly in the court of law.

    • Reeve says:

      @describe_one:
      I am not sure what the buyer would be suing for. Chase can sue and try and get them to buy the insurance or foreclose. The mere demand that another party do something may not be actionable though – courts usually refrain from giving advisory opinions.

      @bagumpity:
      Very good questions that will help clarify the situation.

      Further, the consumerist giving legal advice above is very close to the unauthorized practice of law unless the person writing it is licensed to practice law in the state where this is happening.

  5. MameDennis says:

    I REALLY hate to say this to someone who has just incurred moving expenses, but I think it’s time to lawyer up.

  6. APFPilot says:

    Hopefully you don’t have a Manditory Arbitration Clause in your contract.

    • Tux the Penguin says:

      @APFPilot: The Binding Arbitration would only apply to contractual issues. If anything, I’d argue that this is a legal issue since they are requiring you to carry more flood insurance than is required by law and therefore is outside the terms of the contract.

      The contract most likely states that you need to carry flood insurance in accordance with the laws and regulations of your area, or some legalese like that. But I doubt it states how much. Since your argument is with what the laws require, that’s the place for a judge.

    • Gokuhouse says:

      @APFPilot: I would hope that since it was written into the contract that they would only buy the house if it’s not in a flood plain, that chase would have already breached the contract voiding it. Mandatory arbitration hopefully wouldn’t apply.

  7. bagumpity says:

    1. Did you get the OK on the $60,000 insurance in writing?
    2. Is there anything in your contract that requires you to purchase flood insurance after the lender waived the requirement prior to closing?
    3. What are the penalties for not purchasing the insurance? Does Chase have any remedy other than to foreclose?

    • Mollyg says:

      @bagumpity: One option that the mortgage company has is to buy flood insurance on behalf of the OP, then add the cost of the insurance to the monthly payments.

  8. CharlieInSeattle says:

    Yep get a lawyer. I had the company that I financed my vehicle through try to say I need to have a lower deductible on my insurance. I responded with a certified letter and a copy of the contract that made no mention of it. What you might want to do is go through your contract and make sure they are living within the contract. If there isn’t anything in the contract, or they say in the contract you’re not in a flood plane, then you might be able to tell them to get bent. How can they require insurance for more than you paid for the place anyway.

    • bwcbwc says:

      $200 a month? Where is this place, on the wrong side of a levee along the Mississippi? That explains the wonderful water view you have eh? $200 a month would even be high for the regular homeowner’s/liability insurance, in most places.

  9. floraposte says:

    I’m curious if anybody knows a couple of things. First, who bears the legal responsibility for ascertaining the house is in a flood plain for the purposes of the actual real estate contract; second, what limitations there are likely to be to what the lender can change after they’ve agreed to the terms of a loan. Is nothing fixed but the rate, or is there a chance that Chase can be held to the initial contract here?

  10. winstonthorne says:

    Flood insurance!? But you’re totally ignoring the very real danger of ROBOT ATTACKS! Call Sam Waterston immediately.

  11. Fly Girl says:

    I’m not a Realtor, but my mom is, and I’ve bought and sold before, so I know a little bit about Real Estate law. But I don’t know what state the OP is in, and that can make a big difference.

    Did the OP use a Realtor? Did the seller? It’s the buyer’s job to ensure that the house meets the buyer’s standards before closing the deal. Things that the buyer would have no way of knowing (termites ate through the floorboards two years ago, the house suffered a pretty severe fire and was then rebuilt) have to be disclosed by the seller. Other things (is the water pressure up to par? will the roof need replacing in two years?) are the responsibility of the buyer.

    I’ve never, ever heard of the mortgage company doing anything but ensuring that the home is appraised at or below the finance amount and that the buyer is qualified for the amount that they’re taking out. (Although, we all know that part two doesn’t always happen.)

    Why would the mortgage company be verifying whether or not the home is on a flood plain? Obviously, if it IS on a flood plain, Chase is going to insist that it be insured for floods… They have to protect their investment. And the OP is right about one thing– flood insurance is NOT CHEAP.

    But it seems like a step was missing– the buyer can’t write into the deal “I REFUSE TO BUY THIS HOUSE IF IT IS LOCATED IN ZIP CODE 12345″ and then not do the research to see if it IS located in zip code 12345. Contingencies like that are generally the seller’s responsibility to figure out, ensure. And FIMA maps and zoning isn’t top secret– they’re all public records and readily accessible.

    If the OP can prove that he was lied to, or misled, there’s probably a way for them to reverse the deal and get out of it. But that would involve giving up their dream home (which might not be such a bad idea, if it’s on a flood plain). If they had a Realtor working for them, I’d approach the Realtor and their broker first. It’s their job to ensure that all of the ducks are in order before the deal closes– that’s what they get paid for. If the OP made is clear that flood plains were a deal breaker and then the Realtor failed to confirm that the house wasn’t on a flood plain, then the OP probably has a valid lawsuit. The OP also has a good case if they’ve got written documentation from Chase assuring them that the house is not/was not on a flood plain.

    However, if the OP represented themselves on the deal and doesn’t have written documentation of Chase’s claims that the house is not on a flood plain, they’re going to have little-to-no financial recourse.

    In any case, I’d consult a lawyer.

    • tedyc03 says:

      @Fly Girl: Well I know I certainly wouldn’t buy a house at General Electric (zip 12345)…but moving on…

      it seems that certain things don’t make sense. However, I wouldn’t be surprised if they got a deal on the house and the value of the home is $185,000…but that said, I think there are a number of issues here that can’t be solved in the comments and the OP should spend two or three hours with a lawyer. A retainer might not be necessary but a lawyer is – the laws of real estate are complex and difficult to deal with.

  12. shrike071 says:

    I have been in this same situation. For my house, the flood policy was going to be around $2k a year for a $200k house. Of course, we got this notice AFTER we signed the contract….

    This person needs to go to [msc.fema.gov] and see if FEMA thinks that their house is in the floodplain. Usually, FEMA lumps people into the ‘A1′ floodplain which is the ‘100 year flood’ map.

    The only way to get off the flood-map, is to file a LOMA (letter of map amendment). The form can be downloaded through the website. Then they need to get a qualified professional survey done of their property and have the surveyor fill in the LOMA form with the appropriate information. (Our survey was around $300)

    The key information that FEMA wants is the elevation of the lowest-grade of the property and how far it is from the base flood elevation. The BFE can be found on the flood maps, or if no BFE has been established, FEMA can assist your surveyor in establishing what level should be used. You can see that it pays to locate a surveyor with experience in dealing with FEMA and the flood maps.

    For my house, we were 17 feet above the base flood elevation and our house was lifted from the map. Once the forms have been submitted, it will take 6-8 weeks for a verdict to come back from FEMA. In the end, it is their choice so be prepared for a letdown…

  13. Vicky says:

    I pay under $300 a year for $200,000 of coverage in Texas – where we have some of the highest insurance rates in the country. I would recommend taking a good look at Floodsmart.gov.

  14. chiieddy says:

    Actually, the flood plain maps were recently redrawn throughout the country and is causing headaches because all mortgage companies require flood insurance if you’re at a certain risk level.

    [news.google.com]

  15. lymanjt says:

    Lawyer up, unfortunately. First, though, it might be a good idea to send an EECB to Chase higher ups (or call) and be specific in explaining that you will complain to the OCC. One of the regulator’s favorite things to get a bank for is problems with flood insurance, because it’s so easy to check, and it’s a really big deal. I would argue to the higher ups at chase that the onus is on them for botching the flood review (this is something so basic in underwriting a loan I can’t believe they messed it up) and thus they will pay the policy. If the FEMA maps haven’t been changed since 2002, and they are now saying that you have somehow leaped into the flood plane, it screams incompetence on their part, Someone is trying to cover their ass after botching a flood review. Another thing you might try is getting FEMA to exempt your property from the flood plain, but that involves several months and surveyors, appraisers, etc…

    Also, the OCC is right in that you only have to pay up to your principal amount.

    At any rate, scream loudly to anyone who will listen – TV, newspapers, OCC, internet, etc. The more attention chase gets from this, the more likely they are to give you your just due. Flood insurance problems for a bank are quite poisonous – they cost money in fines, in man hours, and most of all in community reputation. If you get one good write-up or story on a local news station you will probably have them eating out of your hand. YMMV, though. I say EECB them first, document, and proceed to scream from there if your situation isn’t solved.

    I say this as a Compliance Officer at a small bank- someone whose primary concern is making sure my bank doesn’t get caught doing something like this. Or else I don’t have a job.

  16. Reeve says:

    The problem with this whole “get an attorney business” is whether the OP can afford it. If he can not afford $200/mo in flood insurance can he afford $350/hr to fight this considering the lender is unlikely to throw up a white flag as soon as the OP hires an attorney.

  17. cf27 says:

    Why didn’t you check? Just google “flood plain maps,” type in the address and bring up the most up-to-date flood plain maps. Inside of about 5 minutes, I found the flood plain map for the area surrounding my house.

    In some states, sellers have to disclose whether the property is in a flood plain. You may have a claim against the seller. You should check with a lawyer.

  18. Wow, $60,000 wouldn’t be enough for a down payment around here. I’m envious that they found a house they love for $60k.

    • Oranges w/ Cheese says:

      @Canadian Impostor: Agreed. Small, tiny, old houses here are going for upwards of $100k AT THE LEAST, and all I could possibly afford is $70k.. maybe. Guess I have to keep renting.

  19. jsbaker99 says:

    Unless this home was a foreclosure owned by Chase why would you expect them to tell you wether or not it is located in a Floodplain when making an offer.

    I recently put my house up for sale in Texas. In doing so we have to fill out disclosures, 4 of the questions specifically deal with flooding including wether or not the property is in a 100 year floodplain.

    So assuming you have to fill out disclosure’s in all 50 states unless the disclosures specifically state “NO” the OP has no recourse as I can see against Chase. The realtor on the other hand should have made sure this was checked before closing.

    Ultimately the responsibility falls on the buyer unless by chance they have something in writing stating that the house was not in a floodplain. If it was not in the disclosures maybe you could go after the Seller for deceptive trade since they signed the offer. That is assuming you could prove they knew the house was in a floodplain before selling.

    There’s too many variables to work with. Bottom line is that research should have been done before Closing and the blame maybe be equally spread out.

  20. JohnDeere says:

    those papers you signed, ya at the lawyers office are called a contract. if chase is breaking that contract sue them. if that contract says nothing about flood insurance im pretty sure you dont have to pay it at all.

  21. johnva says:

    Why do they want them to have $185,000 in flood insurance coverage if the house is only worth $60,000 and presumably the outstanding principle on the mortgage is $60,000 or less?

  22. ZoeSchizzel says:

    Here in FL, lots of homes are in a flood plane — doesn’t mean the property has ever flooded or will flood. Flood insurance is relatively inexpensive (don’t know where his estimate is coming from, but it seems incredibly high), and to save money you can cover the building only (not contents). Now, with hurricane insurance, you’re going to get soaked!!

    We recently purchased a home with/for our son. It is in a zone AE flood plane, even though it has never flooded. How do I know? I thoroughly researched the property before I purchased. Flood zone information is easily available online, and flood insurance information is available at http://www.floodsmart.gov. I’m not a blame the victim type of person, but who doesn’t do at least minimal research on such a large investment? With a couple of hours of digging, I was able — though online county property appraisor’s and clerk of court records — to trace our property’s transaction history (and the current owner’s financial standing/other properties) and went into negotiation knowing exactly what the owner paid, and that the owner needed a quick sale. We also paid for a home inspection, and required the seller to provide a survey — which clearly states the property is in a flood zone.

    Also, if the purchaser has home insurance, the insurance agent would/should have known about the flood plane as well, and brought it to the homeowner’s attention. I know of NO insurance company that doesn’t just love to add an additional product to the bottom line.

    Additionally, why hasn’t the homeowner done his own research on this topic and gotten other estimates and advice from hiw own insurance agent? If he doesn’t get savvy, I forsee that he will find himself a “victim” again in the future.

  23. nataku8_e30 says:

    This cost actually does seem accurate for flood insurance if he is in a seriously bad flood plain. As far as I’m aware, there are 3 or 4 different categories of flood plain, including coastal, 500 year and 100 year (and no significant risk). If you fall into the no significant risk plain, then you can buy insurance for somewhere between 250 – 450 / year depending on the price of your house. You can only insure up to a few hundred thousand dollars though, as flood insurance is backed by the US government. You will also get almost exactly the same rate from different insurance companies because of the government backing (some companies add on a little more than others). If you are in a risky area, the rate goes up very quickly. I was looking at a ~$115,000 house in a 100 year plain, and they wanted $1700 / year to insure it at 150,000 coverage (rebuild cost). I am surprised that a 60,000 house would have a 180,000 rebuild cost though. Good luck!

  24. Geekybiker says:

    You had a real estate lawyer at the time of closing, right? You should be talking to them. This is something that the seller should have disclosed to you prior to purchase. If it was a bank sale, that doesn’t exonerate them from disclosure laws. While you can’t change that it’s on a flood plain, you should be able to sue for the diminished value of the home at the least. Possibly the cost of maintaining flood insurance for a number of years. This is a situation where you should be talking to a lawyer and its absolutely an actionable issue.

    • Reeve says:

      @Geekybiker: This type of easily discoverable thing would most likely fall under caveat emptor ie “buyer beware”
      Quarry, why did the inspector not look for this?

      @aikoto: The deal has long been done. If at the time they would have found it to be in a flood plain they did not have to go through with the deal. That term is not going to reverse the deal now. Further, it seems they would like to stay (it is their dream home) they just do not want to pay the extra flood insurance (above the $60K the house is worth).

      • Geekybiker says:

        @Reeve: When you sell a home there is a list of disclosures you must fill out for the buyer. Flood plains are typically covered by this (though it may vary by state) If the buyer received this and didn’t read it they are SOL. I’m going to assume the buyers were competent enough to read the disclosures since they went far enough to add the language to their offer. Likely this was a bank sale and the bank screwed up on the disclosure.

  25. aikoto says:

    Doesn’t the fact that your offer stipulated the condition that it NOT be in a flood plain invalidate the offer? Why can’t you just move out and tell the bank to refund any money you paid?

  26. CornDoc says:

    I am assuming that this is a conforming loan and FHA requires a minimum percentage (I believe 85%) of your hazard insurance value or the amount remaining on the mortgage, whichever is greater. This happened to me earlier this year and we had to adjust our coverage. The $185,000 figure is likely related to replacement cost (estimated at about $210K by my numbers), not mortgage value or home value.

    The two things to do are to get an elevation cert ($200-$400) to confirm the structure is out of the flood plain and/or reduce the amount of hazard coverage to reduce the amount of required flood coverage.

  27. Tank says:

    Yep, lawyer up. Your offer specifically mentioned flood plain as a condition for closing, and they disclosed it after the fact. You may be able to unwind the entire deal and find a different house. A pain in the ass, I know, but then you’ll never have to worry about water-logged slippers.

  28. the-perfect-face-for-radio says:

    i have good news for the o.p. – the transaction is closed. the o.p.’s obligations are set forth in the mortgage/deed of trust and they cannot be expanded by the lender after closing, so when the lender tries to demand unbargained-for flood insurance, the correct response is something like “you gits dropped the ball!” (amid peals of laughter) and “if you want flood insurance on this property, you’re gonna have to pay for it yourself!” don’t knuckle under and pay for anything you didn’t agree to in your mortgage.

  29. mehtajr says:

    Sounds like you need a surveyor. Flood plain determinations aren’t a perfect science. I’ve had two different vendors make the exact opposite determination (one saying the property was IN the FZ, one saying it was OUT) on the same property, while stressing to me that they’re both using the same map.

    It’s very possible that you’re a borderline case. The flood plain lines are drawn using topographical, wide area maps and other methods that don’t catch every contour of the area. So, it’s possible that your house is actually elevated high enough to be above the Base Flood Elevation (BFE) for the area it’s in, which would greatly reduce the premium (effectively, you’re elevated above the 100 year flood). If the survey shows this to be the case, you can then file with FEMA/NFIP for a Letter of Map Amendment (LOMA) as a previous commenter suggested. You could be very close to the boundary, and the flood zone determination company may have gotten it wrong. Unfortunately, I’ve seen that happen as well.

    Either way, there’s probably nothing you can do without a survey.

    If you’re outside the FZ, the lender’s ability to require flood insurance depends on what your loan agreement says. Lenders can force you to buy insurance, even if you’re outside the FZ, if you agreed to in the loan documents.

  30. Snakeophelia says:

    “You had a real estate lawyer at the time of closing, right? You should be talking to them. “

    Not all states require this. When I bought a home in PA in early 2003, I wasn’t required to have a real estate lawyer, and didn’t have one – neither did the seller.

  31. Shadowman615 says:

    Get a lawyer. The OP should have done this the first time, certainly before agreeing to pay even $45/month.

  32. ChrisC1234 says:

    I’m confused as to why it’s the mortgage company’s responsibility to determine if the home lies in a flood plain? When I bought my home, part of the information that was provided to me about the property was which flood zone it was in. I never would’ve thought that the mortgage company would be responsible for telling me whether or not it was in a flood plain (and it was actually a realtor who told me that the zone it was in would not require flood insurance).

    Now, being that I live in Southern Louisiana, even though it’s not required, I have flood insurance, and for $120k of coverage structure, $50k contents, I only pay $200 per year.

  33. chenry says:

    $185,000? Is the house at the bottom of a well or something?

  34. ZoeSchizzel says:

    I sure wish we had edit here..flood plain…not plane! Forgive me, we’ve been dealing with a hurricane here.

    One interesting thing I learned while reading through all of the NFIP flood info, is that you can get flood insurance discounts if you live in an area that is in the Community Rating System program. [www.fema.gov]

  35. JeffIowa says:

    The bank is bound by federal law. If the home (collateral) is in a flood plain they must require flood insurance. Period. They get fined by the banking people if they give mortgages to homes in flood plains without flood insurance.
    Did the OP check with an independent insurance agent on homeowners insurance? Did they ask their agent about flood insurance at that time? As my handle suggests, I’m in Iowa, and we just went through the whole flooding thing. I’m also in insurance, so double whammy.
    The bank can and will force place flood insurance on the property. Depending on locale, that could be the same price as regular flood insurance, but probably much more.
    Talk to an agent. Ask them about the National Flood Insurance Program. They can get you a rate, and it should be the same no matter which agency you visit, as it is a federal program.

    BTW, flood covers all surface water that may enter your home. Rivers, streams, runoff from large commercial parking lots, whatever. If the water affects two or more properties, it’s a flood. Better yet, flood is EXCLUDED from all homeowner policies. No coverage, period. The best you can hope for is Backup of Sewer or Drains Coverage, and you have to add that to a homeowner’s policy.

  36. RStewie says:

    I have my mortgage through USAA, who are outstanding, but I have my homeowner’s insurance through Progressive, because they were cheaper. Who is the OP getting his quotes from?

    Also, if this was resolved, does the OP have documentation of that fact? Who did he talk to previously when it was determined $60K coverage was sufficient?

    I wouldn’t lawyer up just yet, as it seems this is just an internal communication error on Chase’s part. See first if they can fix the problem, THEN see about other options.

    Also, I agree with previous comments, that it most likely wasn’t Chase’s responsiblity as the mortgage lender to determine whether or not the house was in a flood plane. The inspector they contracted should have determined that, and if not them, the closing attorney.

    When we got our house, just recently, I had to have the house inspected, the land surveyed, and the title investigated. All of which led to flood plane/insurance questions…and answers. Each of those were done by a different party, for different parties to the sale. The house inspection was liable to me. The survey was liable to the VA, and the bank. The title investigation was liable to the owners.

    Saying all of which…this shouldn’t have been a surprise, and now it’s the OP’s duty to determine WHICH party determined the flood plane, and WHO that party was liable to. Then move from there.

  37. scootinger says:

    be sure to remember the volcano insurance!

  38. BuddyGuyMontag says:

    You need to have Robot Insurance too. Remember when they grab you with those metal claws, you can’t break free.. because they’re made of metal, and robots are strong. Now, for only $4 a month, you can achieve peace of mind in a world full of grime and robots, with Old Glory Insurance. So, don’t cower under your afghan any longer. Make a choice.

  39. chrisjames says:

    Within a few days of investigating I discovered that there had been no changes to the FEMA flood maps in my area since 2002, which means there was no way my house had JUST been put in a flood plane.”

    You thought it important enough to make this detail a critical part of your offer on the house, such that you’re blown away when things don’t go to plan, but admit it could have been cleared up with a few days of investigating. You don’t win that one. Lesson learned. Get them to lower the coverage and remember not to cut corners when researching your next house.

    Congratulations to Nate, by the way.

  40. floraposte says:

    Rereading the OP’s note, I think some stuff is getting misleadingly conflated. It almost certainly wasn’t Chase’s job to verify the flood plain status for the purpose of meeting the terms in the actual house contract. So whose job did the contract make it? Or did the OP’s attorney (or whoever drew up the contract) let him down by failing to stipulate what source would be considered reliable enough to do that?

    I would highly doubt that Chase is allowed to accept a seller’s say-so on such an issue, so either they really fell down on the job by doing so, or their failure to identify the flood plain was an unfortunate coincidence. So this could be two separate screwings with a weirdly common theme rather than one screwing.

  41. lingum says:

    Burn the house to the ground and then laugh at the irony.

  42. scoosdad says:

    Is this something that would have fallen under the jurisdiction of title insurance? Or does that not cover you if the legal paperwork of the property you’ve purchased neglects to disclose the presence of the flood plain? Experts?

  43. henrygates says:

    Wells Fargo did the same thing to me, except with extra “Windstorm Insurance”. No mention of it, bank OKed the insurance we set up, we closed, then 2 MONTHS later not only did they suddenly tell us we need to have windstorm insurance, they charged us for their own windstorm (at a pretty high rate) for the 2 months prior! Paying for insurance retroactively was so much fun.

    What will the bank do? If the OP doesn’t get the insurance, the bank will get it for them and just increase their monthly payment. Good luck fighting it.

  44. j_stone says:

    I think what many people are missing is that the mortgage company getting flood insurance is not something done to protect the consumer it is done to protect the mortgage company.

    Most mortgage closing packages contain a disclosure stating that if at any point flood insurance is determined to be required the consumer must obtain it or the mortgage company will obtain force placed insurance (which is usually really expensive).

    Also, the sale contract has nothing to do with the mortgage company (Chase is this case) unless the house is being purchased from the mortgage company. The contract of sale is between the buyer(s) and seller(s) and no one else.

    It seems that the jump on the mortgage company attitude is misguided in this situation.

    this isn’t legal advice but i have worked in the mortgage industry for several years, and I am a current law school student (which basically qualifies me to give wrong answers)

  45. lauy says:

    I recently purchased a home. During the process, I learned that all land in the US is in a flood plain; however, the issue comes to which grade of flood plain the home is located in. So if the OP simply stated they did not want a home in a flood plain, the request was impossible and the realtors should have made him aware of such.

    Check floodsmart.gov as others above have suggested. FEMA recently updated all the flood plain maps and designations after Katrina. The area of my home had its last map done in the early 80’s. The plain type changed with the new map, but I was not required to carry insurance. WHEW!

    • mariospants says:

      @lauy: “all land in the US is ina flood plain”. There you go, al queda: you’ve just been privvy to the US of A’s greatest weakness. Riiiight.

  46. mariospants says:

    Where did you stipulate that the sales contract was contingent on the house not being in a flood zone/plain? Is it in writing on your offer/condition of sale? If so, you can walk away from the house and mortgage if you prefer because your lawyer can tell them to go to hell.

    Otherwise, if you love the house (and frankly, if it’s 90+ years old and in great shape then likely no flood’s been there since it was built) $45 per month is affordable, right? Oh, and like the others recommended, get Chase to ammend your mortgage terms to include the insurance + possibly ncrease the term in order to compensate for the additional cost.

  47. SabrinaFaire says:

    Former neighbors of mine were required to have an insane amount of flood insurance. They *were* on the water, and luckily had the money to pay for the insurance. When the water started rising last spring, they called up the bank and let them know that they ought to come down there soon to start sandbagging.

  48. BeThisWay says:

    Okay, here’s the deal.

    It is ultimately the buyer’s responsibility to ascertain whether or not the house is in a Special Flood Hazard Area (SFHA). If it is in an SFHA then the federal government requires the mortgage company to require you to have Flood insurance.

    When you buy a house the mortgage company typically orders a survey of the house. One of the pieces of information included in the survey is the Flood Zone, and the Base and Lowest Floor elevations of the house.

    Because the OP has already reached an agreement with the mortgage company to accept 60,000 in coverage the mortgage company should continue to accept that amount (and should anyway since that is what the law requires). But what winds up happening is that the mortgage companies do searches for accounts that aren’t in compliance, so it automatically spits out the OP’s account as not being in compliance, even though they have an exception. So what they have to do when they get this letter is AGAIN show them documentation of the agreement (which they should keep FOREVER, or at least 5 years after they sell the house!), and keep talking to supervisors until it gets approved – which it will (this happens all the time, too, to people who have FEMA exception letters – every year they have to resubmit. It’s a total PITA.).

    The other thing the OP can do is to speak to their insurance agent to confirm that the information the mortgage company has is the most recent flood zone information. Also make sure that the agent sees a copy of the survey showing the lowest floor elevation of the house (if you don’t have one ask your insurance agent for a referral to a surveyor that can do an elevation certificate – you don’t need a full survey, which is much more expensive). This way they can ensure that you pay the lowest possible rate.

    I can’t tell you how many times I’ve argued up the ladder with mortgage companies trying to get them to “get” how they should be doing it. True, they’re not insurance agents so they shouldn’t be expected to know everything, but finding a way to mark files that have been granted exceptions doesn’t seem too much to ask!

    One more thing – everyone with flood insurance should call their insurance agents to make sure they are getting the cheapest rate possible. There are lots of people out there , particularly those in A zones that have been changed to AH, that are paying way, WAY more than they should. That’s because the zones aren’t automatically updated when the maps change, so a zone change could mean a much cheaper rate but unless you call, or have a super duper insurance agent like me who went back through their entire book of business so she could call people and say, “Hey, I’m going to save you $200 a year on your Flood Insurance!”, you’ll likely never know you could be saving money.

    :)

    Good luck to the OP!

  49. JiminyChristmas says:

    Apologies if this is stating the obvious: I’m not sure if this is the case everywhere, but on my property tax assessments, the land value and building value are broken out as separate portions of the total value of the property.

    Often, people buy more insurance than they need because they insure the full value of their mortgage, which includes the land value. If your house burns down, the lot will still be there. Likewise, it will still be there when the floodwaters recede. So, if you can reduce the amount of coverage you have to carry by the value of the land, it could save you money.

  50. SamDFA says:

    Just a note: Everyone is in a flood zone. Every property in the United States is mapped for flood zones. There is a difference between a favorable flood zone (like zone X) and an unfavorable flood zone (zones thats start with A or V).

    As an insurance agent in NC, we frequently get these notices from our clients mortgage companies. I would recommend placing flood coverage with your insurance agent as 99% of the time they can find a better rate than the bank who doesn’t care what it cost.

  51. pgaulrapp says:

    If you have copies of your offer on the home, would the stipulation that you would withdraw the offer if the house was found to be in a flood plain make the mortgage contract null?

  52. msbask says:

    How does the mortgage company have anything to do with the initial offer on the house, which the OP said would be withdrawn if the property was in a flood zone? He didn’t make the offer to the bank, he made it to the seller.

  53. FatLynn says:

    I know that my mortgage says that, if the maps are redrawn and I am suddenly in a flood plain, I will then have to get flood insurance. That is perfectly legal, and if that is the language Chase used, the OP may be out of luck.

  54. bravo369 says:

    i never bought a home but is the offer sheet on file somewhere that shows the offer was contingent upon whether the home was in a flood area? if so, can a judge nullify the agreement because it is in violation of what was agreed upon? probably not but maybe a lawyer can make that argument and you can get what you’ve paid so far plus interest back from the bank.

  55. Philthadelphian says:

    This is what you get for not ruining your credit in college and qualifying for a home loan. Good luck with the flood insurance – I’ll just keep sitting pretty in my uninsured, one-bedroom basement apartment.

    Guess I should’ve gone to FreeCreditReport.com.

  56. ghettoimp says:

    I don’t see how the mortgage company can change the terms of the mortgage after you’ve closed.

    Your closing statements are a contract between you and the company, which should include all the conditions of the agreement. Among those conditions should be the amount of insurance you are required to have. It doesn’t seem that they should be able to change that any more than they can raise your interest rate or charge you newly-invented fees.

  57. FrankReality says:

    If the house was in the flood plain, the seller (at least here in MN) is REQUIRED to disclose that and the listing agent is supposed to verify this.

    Failure to disclose can result in the buyer being able to back out of the purchase and/or to collect substantial financial damages from the seller. It is essentially fraud. The big catch here in MN is that you must prove that the seller deliberately knew and failed to disclose – e.g. they had flood insurance coverage. Last, these things are typically negotiated and settled without the court getting involved although sometimes court is necessary.

    We had such a situation where the previous owner not only failed to disclose major problems, but also stole fixtures which were to stay with the house, and left garage and junk virtually everywhere. Legally, we could have sued them, but the check for the property from our mortgage company to them was seized in the real estate law office by the party from which they bought the property. Turns out the people we bought it from had bought it contract for deed and made only a few payments on the house, meanwhile living in it for years without paying on the contract. We couldn’t sue simply because the seller had nothing to recover.