Federal Mortgage LawsQuestion 69 of 400
The required amount of flood insurance on a residential building is generally the least of the outstanding principal balance, the insurable value of the building, or:
a.The full purchase price
b.Twice the loan amount
c.The county's median home price
d.The maximum coverage available under the NFIP
Explanation
Required flood coverage generally equals the least of: the outstanding principal balance of the loan, the maximum limit of coverage available under the NFIP for the property type, or the insurable (replacement) value of the building. Land value is excluded because land does not wash away. For residential buildings the NFIP maximum is a fixed statutory cap.
Law Reference: Flood Disaster Protection Act / National Flood Insurance ProgramPractice all 400 questions free — no signup required.
Related questions on this topic
- The Home Valuation Code of Conduct (HVCC) was largely superseded by which framework establishing appraisal independence?
- Which of the following is permitted under appraisal independence rules?
- A property securing a federally related mortgage is located in a Special Flood Hazard Area. What must the lender require?
- A borrower lets required flood insurance lapse. After proper notice, the servicer purchases coverage and charges the borrower. This is known as:
- Under the Mortgage Acts and Practices Advertising Rule (Regulation N), which advertising practice is prohibited?
- An advertisement states 'Fixed 3.5% payment for life!' when in fact only the minimum payment is fixed and the interest rate adjusts, causing the balance to grow. Under Regulation N this ad is:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against NMLS SAFE Mortgage Loan Originator National Test · How we review