Int Q&A – Exemptions 5 – In the event that a triggering event has occurred, is the lender required to review the intended use of each detached structure?

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Q:  EXEMPTIONS 5. In the event that a triggering event has occurred, is the lender required to review the intended use of each detached structure?
 
A:   Yes, a lender must examine the status of a detached structure upon a qualifying triggering event to determine whether the detached structure exemption still applies. See Applicability 13. There is no duty to monitor the status of a detached structure following the lender’s initial determination unless a triggering event occurs. However, regardless of the absence of a duty to monitor the status of a detached structure in the Regulation, sound risk management practices may lead a lender to conduct scheduled periodic reviews that track the need for flood insurance on a loan portfolio.  
 
 
ADDITIONAL INFORMATION:
This Q&A was included in the Interagency Questions and Answers Regarding Flood Insurance, which were issued on 05/11/2022.  They were published in the Federal Register on 05/31/2022 and may be found here:  https://www.federalregister.gov/documents/2022/05/31/2022-10414/loans-in-areas-having-special-flood-hazards-interagency-questions-and-answers-regarding-flood
 

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