Why do I need it?
In 1968, the National Flood Insurance Program (NFIP) set the parameters for lender requirements that have made Flood Zone Determination a basic condition for closing on a federally backed mortgage. Subsequent changes to NFIP in 1973 and 1994, made flood insurance mandatory for all federally backed loans on buildings that are located within a Special Flood Hazard Area (SFHA).
Sample Certification with notice to borrower
A Special Flood Hazard Area (SFHA) is defined as an area within an identified flood plain having a greater than 1% chance of flooding within any given year. About 19,000 communities in the United
States are considered to be located in an SFHA, and 95% of these communities participate in the NFIP. Only SFHA communities that are participants in the NFIP are required to purchase flood insurance.
Any mortgage loan that is provided by a federally regulated lender or government sponsored lending institution (Fannie Mae and Freddie Mac) is required to have a Flood Zone Determination report.
The FZD report protects investors and borrowers by guaranteeing that flood insurance is purchased for properties considered at risk. Flood Zone Determinations (FZD’s) are mandatory reports
that determine whether a property is located within an area vulnerable to flooding. Depending on the status of the lender and whether a community participates in the National Flood Insurance Program, flood insurance may or may not be required.