May 10, 2012
A reader asks, “I live in a town that is considered a flood area regardless whether you’re on a hill or in the valley…will the FHA do a manufactured home loan considering the area?”
FHA loan rules are specific when it comes to flood zones,and make a distinction between areas prone to flooding and something called the Special Flood Hazard Area (SFHA). The lender must make a determination whether a home is located in one of these special areas where appropriate.
Your lender will likely require flood insurance as a condition of the loan when the property is in a known flood area.
However, when a home is located in or near a Special Flood Hazard Area, the rules vary depending on the type of home. For example, where new construction homes are concerned, “If any part of the property improvements (the dwelling and related structures/equipment essential to the property value and subject to flood damage) is located within a Special Flood Hazard Area, the property is ineligible for FHA mortgage insurance” unless the following conditions apply, according to FHA Mortgagee Letter 2009-37;
“A final Letter of Map Amendment (LOMA) or final Letter of Map Revision (LOMR) that removed the property from the Special Flood Hazard Area location is obtained from FEMA; or
If the property is not removed from the SFHA by a LOMA or LOMR, the lender must obtain a FEMA National Flood Insurance Program Elevation Certificate (FEMA form 81-31
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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