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Would the flood insurance requirements apply to a loan that is secured by land with minimal improvements, such as a shed and grain bins? – IBA Compliance Connection

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Would the flood insurance requirements apply to a loan that is secured by land with minimal improvements, such as a shed and grain bins?

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If the loan is not secured by a “building or mobile home” on the property, it would not be considered a “designated loan” that is subject to the flood insurance requirements. 12 CFR 22.3. As stated in the Interagency Questions and Answers Regarding Flood Insurance, “[a]ny loan secured only by land that is located in an SFHA in which flood insurance is available is not a designated loan since it is not secured by a building or mobile home.” Question 19, 74 Fed. Reg. 35914, 35937 (July 21, 2009). Therefore, the loan would not be subject to the flood requirements if the security agreement does not include any “buildings” (or mobile homes).

The flood insurance regulations define “building” as follows (12 CFR 22.2(c)):

Building means a walled and roofed structure, other than a gas or liquid storage tank, that is principally above ground and affixed to a permanent site, and a walled and roofed structure while in the course of construction, alteration, or repair.