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. The National Flood Insurance Act (Act) looks to the collateral securing the loan.  If the lender takes a security interest in a building or mobile home located in an SFHA in which flood insurance is available under the Act, then flood insurance is required.  The Act makes no exception for property taken as collateral by a lender out of an abundance of caution.

June 2019