I recently obtained a loan for $10,000 and made several home improvements. The lender decided to take a security interest in my home, but only as a precaution. My home is in a Special Flood Hazard Area (SFHA). Will I be required to have flood insurance?
Yes. If the lender takes a security interest in a building or mobile home in an SFHA in which flood insurance is available under the National Flood Insurance Act (NFIA), then flood insurance is required. The NFIA makes no exception for property taken as collateral by a lender out of an abundance of caution.
Refer to 42 USC 50 "National Flood Insurance Act."
Last Reviewed: October 2020
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