Requirements for Project Developments

When a loan is secured by a unit in an attached condo and flood insurance is required as described in Determining if a Property Requires Flood Insurance, the underwriter must verify that the HOA maintains a master flood insurance policy with premiums paid as a common expense, unless otherwise indicated in the table below.

The following table provides additional requirements based on the project type.

Condo

The underwriter must verify that the HOA maintains a Residential Condominium Building Associated Policy (RCBAP) or equivalent private flood insurance coverage for a condo building consisting of attached units located within an SFHA. The only building that must be verified is the subject unit's building. Homium does not require evidence of a master flood insurance policy, provided the unit owner maintains an individual flood dwelling policy that meets the coverage requirements of this Guide for the following loans or project types: units in a two- to four-unit project, and detached condo properties. The master flood insurance policy maintained by the HOA must cover the subject unit's entire building; and all of the common elements and property, including machinery and equipment that are part of the building. The coverage amount for the building must be at least equal to the lesser of 80% of the replacement cost value(1), or the maximum coverage amount available from NFIP per unit(2). (1)If the master flood insurance policy meets the minimum coverage requirement of 80% of the replacement cost value, but the per unit coverage amount does not meet the requirement for loans secured by one- to four-unit properties, as described above, the unit owner must maintain a supplemental policy for the difference. (2)If the commercial space of an attached condo is over 25%, coverage provided by the General Property Form (or equivalent coverage) is insufficient. A private flood insurance policy, or a private flood insurance policy in conjunction with a General Property Form policy (or equivalent coverage) must be maintained by the HOA to equate to coverage requirements for projects eligible for an RCBAP. The contents coverage must equal the lesser of 100% of the replacement cost value of all contents owned in common by the association members, or the maximum coverage amount available from NFIP.

PUD

The underwriter must verify that each attached or detached individual PUD unit maintains a Dwelling Form policy or equivalent private flood insurance policy on the subject property. See Requirements for One- to Four-Unit Properties above for the required amount of coverage.

See Mortgagee Clause for Property and Flood Insurance and Named Insured for Property and Flood Insurance in Mortgagee Clause, Named Insured, and Notice of Cancellation Requirements for additional information.