By Elly Leonida, FVP Operations Manager
Over the last decade, mortgage lenders have seen dramatic changes in how loans are approved, processed and closed with technology and automation improving speed, accuracy and the customer experience. The improvements have permeated all aspects of the mortgage life cycle, including the flood certification required for every home loan.
Automation and enhanced technology allows LERETA to provide immediate and accurate flood determinations for more than 93% of mortgage applications. But what about the 7% that are exceptions – a percentage that’s even higher for other flood certification providers that don’t have the latest technology in place? What about those homeowners whose flood risk determination changes as a result of updated FEMA flood maps?
The FEMA Risk Rating 2.0 was passed last October 1st and any policies renewed after April 1st changed how flood risk is determined and evaluated, leveraging the industry’s best practices to provide accurate flood risk to an individual property. FEMA is getting smarter with more advanced technology and efficient processes for issuing updated maps, but there will always be exceptions, especially since flooding is the most common natural hazard in the U.S. In fact, no region is safe from flooding, and all 50 states are subject to flash floods. With that much activity, exceptions are no small matter.
Exceptions Require Expert Handling
LERETA works with lenders and insurance companies of all sizes to leverage the benefits of automation for the vast majority of straight-forward flood certifications; but, just as important, to manage the details of the small percentage of exceptions. Proper handling of exceptions isn’t just smart, it can be the key difference in getting ahead of the pack.
FEMA typically issues revised flood zone maps two times a month, but it falls to providers like LERETA to digitize these updated maps to ensure consistently accurate flood determinations. These continually published updates can mean big changes for homeowners. A homeowner may not have previously been in a Special Flood Zone Area, but with revised FEMA data, they now are and must carry flood insurance. Likewise, a homeowner – or potential buyer – may be in a Special Flood Hazard Area, but due to elevation that is unique to the specific property (if it’s on a mountain, for instance) or enhancements to elevation in the case of new construction (in which the builder raises elevation with earthen fill), they could be exempted from flood insurance requirements or eligible for reduced insurance rates.
Leveraging the LOMA Option
For many of these exceptions, a Letter of Map Amendment (LOMA), issued by FEMA, can be an invaluable solution. There is also a Letter of Map Revision (LOMR) for larger areas, such as subdivisions and residential developments. But few homeowners are aware of the LOMA option, and many lenders and servicers don’t have the expertise or staff who can guide their homeowner-customers through the detailed process for a successful outcome. At LERETA, paying close attention to detail and developing solutions for the exceptions is what drives our success, so managing the LOMA process is just another way in which we add value.
We provide life-of-loan flood zone tracking to our clients so that any change to a home’s flood status is flagged, whether it’s for a new loan or an owner who’s had a mortgage for years. Because LERETA has a dedicated GIS team that works specifically on exceptions, our clients leverage our expertise to work directly with homeowners to resolve issues and obtain LOMAs if they qualify – all at no additional cost to the lender or homeowner, even for rechecks or rushes. We also have three certified floodplain managers who are certified every year through the National Flood Insurance Program who bring an additional level of expertise. As a result, our team can determine if an owner is a good candidate to secure a LOMA before the process even begins. If they are, we help them complete all of the necessary steps, legal obligations and documentation requirements which may include:
- LOMA Application Form
- The property’s year of construction
- Elevation certificate, provided by a licensed land surveyor or registered professional engineer – the lowest adjacent grade of the structure must be at or above the Base Flood Elevation
- Plat/parcel map, FEMA Flood Insurance Rate Map with aerial
- Recorded property deed
- Fill Placement Yes or No
The process can take up to six weeks once data is submitted to FEMA, so FEMA created eLOMA, an electronic, web-based tool to speed up the process. As with traditional hardcopy LOMA applications, an eLOMA application must include the required technical information and other documentation to be considered. While a much quicker option, it still requires due diligence on the details so that all documentation and requirements are properly completed and submitted.
Some lenders and their homeowners want to know in advance whether a flood certification status will change, even before a FEMA map revision becomes effective. To help our clients be proactive, LERETA can provide a probability scan that gives them a jump on the information with more than 99.9% accuracy, reducing the timeframe from more than a month to only a few days. This tool has also proven to be valuable for insurance carriers who use it for marketing purposes to identify potential homeowners who will be required to carry flood insurance.
At LERETA, we’ve built our business by focusing on the details – with innovative technology and automation to move the flood and tax servicing industry forward, with a commitment to elevate the customer experience, and with building experienced teams who have the expertise to manage exceptions for consistently successful outcomes.
To learn more about how we manage flood certification details, visit Advanced Flood Tracking & Certification page.
