Flood determinations on a commercial loan

The FDIC's Consumer Compliance Examination Manual section on the Flood Disaster Protection Act, opened October 30, 2026, says the Act requires the federal agencies to prohibit their regulated lenders from making, increasing, extending, or renewing a loan secured by improved real estate or a mobile home in a special flood hazard area in a community that participates in the National Flood Insurance Program, unless the property is covered by flood insurance. It says the insurance may come through the NFIP or a private carrier. It then states the three factors that make the insurance requirement apply, and it expressly includes a commercial loan as well as a consumer loan: the loan is secured by improved real estate or a mobile home affixed to a permanent foundation; the property is or will be in a special flood hazard area identified by FEMA; and the community participates in the program. The manual says this includes a security interest taken only out of an abundance of caution. A commercial mortgage on a building is in that sentence. Vacant land with no building is a different question for counsel and the manual, not a waiver this page invents.

The same manual says the institution must use the standard flood hazard determination form developed by FEMA to decide whether the building or mobile home is in a special flood hazard area where flood insurance is available. A printed, computerized, or electronic form is allowed. The institution keeps a copy for as long as it owns the loan. FEMA has said an electronic format must still contain the form's mandatory fields. The manual says decisions may not rest on the institution's own view of flood elevations. Map revisions and amendments are FEMA's. The form is not a substitute for the separate notice to the borrower. The Federal Reserve's interagency questions and answers, opened the same day, say the determination form and the borrower notice are different documents.

What to order, and what this page will not price

Order the determination early enough that a surprise zone does not appear the week of closing. If the result is a special flood hazard area in a participating community, budget for the insurance the statute requires. This page does not copy the coverage formula or a premium. Insurance the lender wants beyond flood, including liability and property, is Arizona insurance requirements. The survey and zoning report that sit next to the determination are ALTA surveys and zoning reports.

Capital Market Funds is not FEMA and not the insurer. Capital Market Funds is not a Fannie Mae DUS lender. This note is general information. It is not tax advice, legal advice, or an appraisal. A CPA, an attorney, or the other professional named in the note decides how the rule applies to a given property. The office is 7373 E Doubletree Ranch Rd #255, Scottsdale, AZ 85258. The phone is (480) 495-8072. Capital Market Funds, LLC - CBK-2007014 - Commercial Mortgage Banker and NMLS 1445066.