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My bank is making a loan to a customer who is purchasing a residential condominium unit in a flood zone, but the condominium association does not have a master flood insurance policy. Does the bank comply with the flood insurance requirements as long as the borrower obtains a policy for the borrower’s individual unit?

My bank is making a loan to a customer who is purchasing a residential condominium unit. The condominium is located in a flood zone, but the condominium association does not have a master flood insurance policy. Does the bank comply with the flood insurance requirements as long as the borrower obtains a policy for the borrower’s individual unit?

Yes. Question #29 in the 2009 Interagency Question and Answers Regarding Flood Insurance asks, in response to the question, “What action must a lender take if there is no RCBAP [residential condominium association policy] coverage?” states “If there is no RCBAP… the lender must require the individual unit owner/borrower to obtain a dwelling policy in an amount sufficient to meet the requirements outlined…” (December 2019)

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