Important Updates

Date: December 28, 2010

To: All Approved Mortgagees

All Approved Mortgage Servicers

All FHA Roster Appraisers

Mortgagee Letter 2010-43

Subject Flood Zone Requirements for Federal Housing Administration (FHA)

Insured Mortgages

Purpose This Mortgagee Letter provides new guidance on FHA Flood Zone

requirements and updates Mortgagee Letter 2009-37. FHA now requires that

all Mortgagees obtain a flood zone determination on all properties instead of

strongly encouraging such action. In addition, FHA is now consistent with

the Coastal Barrier Resources Act (CBRA) by prohibiting FHA Mortgage

Insurance for properties located within designated coastal barriers.

The new guidance contained in this Mortgagee Letter is as follows:

A requirement that Mortgagees obtain life-of-loan flood zone

determination services for all properties that will be collateral for

FHA-insured mortgages.

A notice that any property located within a designated Coastal

Barrier Resource System (CBRS) unit is not eligible for an FHAinsured

mortgage.

Effective Date All requirements contained in this Mortgagee Letter are effective for all case numbers assigned on or after March 1, 2011.

Changes to Existing Policy:

The changes to existing policy that are a part of this mortgagee letter provide

new guidance and clarification of existing guidance. The revisions identify

the Topic heading and provide the entire content of each block affected with

the specific changes underlined. The changes will be integrated into the FHA

Single Family On-Line Handbooks prior to March 1, 2011.

If you have questions concerning this Mortgagee Letter, please call the FHA

Resource Center at 1-800-CALLFHA (1-800-225-5342). Persons with

hearing or speech impairments may reach this number via TDD/TTY by

calling 1-877-TDD-2HUD (1-877-833-2483).

David H. Stevens

Assistant Secretary for Housing-Federal Housing Commissioner

Mortgagee Letter 2010-43, 4155.2, Chapter 4.3.j

Instructions to FLHA Roster Appraisers:

FHA Roster Appraisers are required to review the applicable FEMA

FIRM and make appropriate notations on the applicable appraisal

reporting form. If the property is located within a SFHA, the

appraiser must:

Attach a copy of the flood map panel to the appraisal report.

Enter the FEMA zone designation on the reporting forms well

as identify the map panel number and map date.

Quantify the effect on value, if any.

Note: If the property is not shown on any map, the appraiser must

enter “not mapped.”

Appraisers are required to perform the due diligence necessary to

determine if a property is located within a CBRS. The CBRS

boundaries are identified on the FEMA FIRM by patterns of

backward slanting diagonal lines, both solid and broken. The

USFWS mapping database is an additional source that identified the

CBRS boundaries. If the property is located within the CBRS

boundaries, appraisers are instructed to immediately stop work on

the assignment and return the file to the Mortgagee.

Reference: For more information on flood insurance requirements,

see UD 4150.2, Valuation Analysis for Single Family One-to-Four

Unit Dwellings.