P1-167

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Question 1 of 8

1. Question
What was the primary purpose of the Flood Disaster Protection Act of 1973?
- A) To provide federal flood insurance at reasonable rates and impose standards on communities that participate in the national flood program
- B) To force states to build levees and dams
- C) To create private flood insurance marketplaces
- D) To eliminate all flood zones in the U.S.
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Question 2 of 8

2. Question
For which types of loan transactions must a lender determine whether a property is in a Special Flood Hazard Area (SFHA)?
- A) Loans where credit is extended, renewed, or increased
- B) Only refinance loans
- C) Only HELOCs
- D) Only purchase money loans
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Question 3 of 8

3. Question
A property is classified as being in a “Special Flood Hazard Area” only when it is located in:
- A) A 50-year flood plain
- B) A 100-year flood plain
- C) A 500-year flood plain
- D) A coastal erosion zone
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Question 4 of 8

4. Question
How many days prior to closing must a lender provide the Special Flood Hazard Area notice to the borrower?
- A) 10 days
- B) 7 days
- C) 5 days
- D) 3 days
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Question 5 of 8

5. Question
If the property is in a Special Flood Hazard Area and the community participates in the National Flood Insurance Program (NFIP), what must the borrower be told?
- A) That flood insurance is optional and not regulated
- B) That NFIP flood insurance is available for the property
- C) That flood zones are reviewed only after closing
- D) That only private flood insurance is permitted
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Question 6 of 8

6. Question
What must the lender obtain from the borrower before closing when a flood hazard notice is required?
- A) Verbal acknowledgment
- B) Written acknowledgment of receipt of the notice
- C) A notarized flood waiver
- D) A signed affidavit from the appraiser
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Question 7 of 8

7. Question
What is a key secondary-market consequence when a community does NOT participate in the National Flood Insurance Program (NFIP)?
- A) Lenders must provide free flood insurance
- B) Fannie Mae and Freddie Mac will still buy the loans, but at a discount
- C) Fannie Mae, Freddie Mac, FHA, and VA will not purchase or insure loans in that community
- D) The lender must automatically deny all loans
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Question 8 of 8

8. Question
How is the minimum required amount of flood insurance coverage determined?
- A) Always the full market value of the home
- B) Always 80% of replacement cost
- C) The tax-assessed value only
- D) The lesser of: the loan amount OR the value of the property minus the land value
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