Sinkhole Search Product Introduced
With the spate of natural disasters which has afflicted the country in recent years, it has become more important for lenders to truly know what possible hazards exists at a property they might lend on.
FloodInsights, a national provider of automated FEMA flood zone determinations to appraisers, homeowners and mortgage and real estate professionals based in Boston, has added a Florida sinkhole report to its product offerings.
Hallie Benjamin explained that when the searcher types in a property address in Florida, besides the flood map data, the user also gets a report on the distance and the amount of sinkholes surrounding the property. The two reports together cost $9.95.
Specifically, the user is able to see the distance to closest sinkhole; the number of sinkholes within a half-mile radius and then within a one-mile radius; and a sinkhole hazard map, with an aerial photo optional.
The database consists of more than 15,000 sinkholes and new ones are being added every day, Benjamin said. The information has not been in a concise location and that is what FloodInsights is looking to fix with this product.
In Florida, borrowers have to obtain an additional sinkhole coverage rider to their homeowner’s insurance policy. There is also a sinkhole disclosure form in the state, which says if the seller knows about a sinkhole they have to notify the buyer, but it is not a formalized process yet and not seen commonly.
For lenders, it allows them to ensure the proper valuation for the property, Benjamin explained, adding “We want to give [lenders] the most information they can get about a property. It is just to inform them of things that aren’t included in the appraisal.”
Appraisers will only note a sinkhole in their report if they see one on the property. They don’t go around the neighborhood looking to see if there are sinkholes in the surrounding area.
It allows lenders to make sure the borrower has the right insurance protection in place and from a servicing point of view it ensures the borrower has the means to maintain paying on the property.
FloodInsights is releasing the product in Florida first, and depending on interest and demand, may offer it for other areas. But Florida is first because there are so many sinkholes in the state, especially in the Orlando-Tampa Bay-St. Petersburg area. There could be hundreds of sinkholes within a mile of a property in that part of Central Florida, she noted.