Policy

Policy. The VHPB requires that the collateral securing loans at this agency be protected by the insurance most commonly used for the subject property, and that the VHPB be the beneficiary of that insurance (mortgagee). The borrower shall be required to keep the improvements existing at the loan’s origination or thereafter erected on the property insured against fire and other hazards included within the term “extended coverage”. Required insurance amounts are the market value of the property or the loan amount, if the loan amount is higher than market value. In no event should insurance coverage be less than 80 percent of the current value of the property. Insurance must be maintained for the life of the loan. Flood insurance is required for the life of the loan if the property is located in a special flood hazard area, or if the property has previously flooded. The determination of whether or not a property is within a special flood hazard area will be made by the company employed by the agency to do so. If the company employed by the agency determines that a property is not located in a special flood hazard area and the property appraisal indicates that the property is in a special flood hazard area, the agency will require flood insurance on the property. The requirement for flood insurance may be removed on such a property if a determination is made by the company employed by the agency and the appraiser agree that the property is not in a special flood hazard area.