Flood Insurance Escrow When Property Is No Longer in a Flood Zone
Issue/Inquiry
The Bank has a loan for which it escrows for flood insurance. However, it recently received a life-of-loan determination that the property was no longer in a Special Flood Hazard Area. Should the Bank obtain verification to determine whether a mistake was made? In addition, if flood insurance is no longer required, should the Bank give the borrower an option to continue the escrow or refund the escrow balance to the borrower?
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