Q: When can lenders or servicers charge the borrower a fee for making a determination?
A: There are four instances under the Act and Regulation when the borrower can be charged a specific fee for a flood determination:
• When the determination is made in connection with the making, increasing, extending, or renewing of a loan that is initiated by the borrower;
• When the determination is prompted by a revision or updating by FEMA of floodplain areas or flood-risk zones;
• When the determination is prompted by FEMA’s publication of notices or compendia that affect the area in which the security property is located; or
• When the determination results in force placement of insurance.
Loan or other contractual documents between the parties may also permit the imposition of fees.
– This Q&A was included in the “Interagency Questions and Answers Regarding Flood Insurance.” For ease of collection, this has been obtained from the FDIC’s Compliance Examination Manual – April 2016, which may be found here: https://fdic.gov/regulations/compliance/manual/5/V-6.1.pdf