Because errors and changes occur, FEMA has established administrative procedures to change the flood zone designation for properties that may be inadvertent inclusions.
the Base Flood Elevation (BFE) of the flood zone, MHC lenders will often allow those flood zone sites and their rental income to be included underwriting. Furthermore, home elevation certificates are helpful to the individual residents if they have loans on their homes because chattel lenders may otherwise enforce the requirement for these residents to obtain f lood insurance for their homes. As previously stated, a high risk flood zone designation often will have an adverse effect on a property’s value, as well as options for financing. The good (and bad) news is that FEMA flood maps may contain inadvertent inclusions, so all is not lost if your property is currently shown in a flood hazard area. By working with a qualified and experienced surveyor or engineer, a property owner may be able to change the designation. Even if you are not financing or selling your community at the moment, it
is a good idea to be proactive in pursue all options to move your property “out of the zone.” MHV Nick Bertino and Matt Herskowitz are loan originators a t Wel l s Fargo Multifamily Capital, specializing in providing financing for manufactured home communities through their direct Fannie Mae and Freddie Mac lending programs and correspondent lending relationships. If you would like to receive future newsletters from them, or a copy of their Manufactured Home Community Financing Handbook, call (760) 438.2153 or email matthew. herskowitz@wellsfargo.com or nick. bertino@wellsfargo.com. Matt Herskowitz is a Vice President at Wells Fargo Mult ifamil y Capital, based in San Diego, California. Matt specializes in Conventional Multifamily and Manufactured Home Community financing through Fannie Mae and Freddie Mac programs. Matt originates loans nationally and supports the underwriting process from quote to close. Matt lives in Carlsbad, CA, and enjoys surfing, fishing, and diving.
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Finance
property owner would then engage the surveyor or engineer to prepare an “elevation certificate” for the property, and complete a formal application package for submission to FEMA. With respect to MHCs, we recommend that the property owner work with a surveyor or engineer who has experience with the property type. If multiple homesites are shown as lying within a high-risk flood zone, for instance, ground level elevations will need to be determined for each of those sites, not just for physical structures such as a clubhouse. Upon receiving a complete application, FEMA normally will complete its review and issue its determination within four to six weeks. If FEMA approves the application, they will issue the LOMA or LOMR that will evidence the property is removed from the flood zone. If, after exploring all available options, it is still determined that improvements or homesites at a property are located in a high-risk f lood zone, the property owner can overcome the challenge from a financing perspective. Many MHC lenders will, at a minimum, remove any flood zone sites and their rental income from the underwriting of the property’s overall cash f low. A lower underwriteable cash flow will typically result in a lower loan amount and/or higher interest rate. However, if it can be evidenced through documentation (ideally, elevation certificates) provided by a surveyor that the f loors of any manufactured homes located on the flood zone sites are elevated above
