If a lending institution is federally regulated or making federally backed loans, it must review the NFIP maps to determine if the building is located in a Special Flood Hazard Area. The SFHA is the area that is expected to be inundated by a 1% annual chance of flood. If the bank makes such a determination, it must require the borrower to purchase flood insurance. Please note, these determinations are purely in/out and do not involve the vertical elevation of the structure.
If you disagree with the lending institution's determination, you may request that FEMA review the lender's determination. FEMA will then review the information that the lending institution used, and issue a letter that states whether we agree with the determination. Your request must be postmarked no later than 45 days after the lending institution notifies you of the flood insurance requirement and the submittal must be complete. The request must include all of the information and fees listed in the Letter of Determination Review (LODR) information sheet. If your request is postmarked after the 45-day limit has expired, or if we do not receive all of the information within the 45-day limit, we will not be able to review the determination and the flood insurance requirement stands.
FEMA's responses to these requests are called LODRs, and offer two basic dispositions: (1) the lender's determination stands or (2) it is overturned. FEMA's determination is based on the technical data submitted. If the lender's evidence is inconclusive or the request is incomplete FEMA can disagree with the lender's determination. FEMA's response does not amend or revise the NFIP map for your community. It only states that FEMA agrees or disagrees with your lender's determination.
Occasionally a lending institution may require insurance if it determines that a part of your lot is in the SFHA. The NFIP does not insure land. However, even if you submit evidence that your building is out of the floodplain, the bank may still decide to require insurance on your building.