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

But all it says is "Volcano insurance" over and over again.

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.

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.

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

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

@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.

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?

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.

@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.

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?

@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.

@floraposte:
Your questions depend on the language of the contract which we do not have a copy of.

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

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.

@sir_eccles:
and the bottom of it says "he's signing it, I can't believe he's signing it!"

@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.

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...

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.

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]

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.

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.

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.

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.

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.

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.

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?

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 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.

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!

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.

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?

@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).

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.

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.

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.

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.

@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.

@Tank: The seller did not reveal anything after the fact. The bank is the one who found it was a flood plain not the seller.

"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.

@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.

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

@Snakeophelia: required or not it seems it would be a smart thing to have when signing complex binding legal documents that you don't fully understand.

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.

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

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]

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.

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.

be sure to remember the volcano insurance!

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