Title: Bank Is Held Liable For Not Revealing Flood Hazard
Full Citation
Permanent Link: http://ufdc.ufl.edu/WL00000978/00001
 Material Information
Title: Bank Is Held Liable For Not Revealing Flood Hazard
Physical Description: Book
Language: English
Publisher: U.S. Water News
Spatial Coverage: North America -- United States of America -- Florida
Abstract: U.S. Water News Article December 1988
General Note: Box 7, Folder 4 ( Vail Conference 1989 - 1989 ), Item 77
Funding: Digitized by the Legal Technology Institute in the Levin College of Law at the University of Florida.
 Record Information
Bibliographic ID: WL00000978
Volume ID: VID00001
Source Institution: Levin College of Law, University of Florida
Holding Location: Levin College of Law, University of Florida
Rights Management: All rights reserved by the source institution and holding location.

Full Text

Bank is held liable for not revealing flood hazard
ORWALK, Conn. For the first time in history, a sated her for both insurable and uninsurable losses.
y has brought in a judgment against a bank for An FEMA memo suggests that the lawsuit should put
ure to notify the mortgage holder that mortgaged lenders, particularly smaller-scale lenders, on guard to
perty was in a flood hazard area, according to the comply with Federal Insurance Administration flood
eral Emergency Management Agency (FEMA). hazard guidelines when making real estate loans. Inde-
he litigation, "Small V South Norwalk Savings pendent flood certification agencies agree. Martin M.
k" (205 CONN. 751), centered on the bank's failure Friedman, president of one such company, Flood Haz-
dvise a Ms. Small that her property was in a flood ard Certification, Inc. of Elmwood Park, N.J., said fully
ard area after she had taken a $52,000 loan to buy insured flood search services are available to lenders in
property. But Small did not take out flood insurance many states. The fee for his company's services, said
cause the appraiser, after having used the bank's Friedman, is $12.50.

out-of-date flood map to evaluate flood danger, did not
tell her that such insurance was necessary. An up-to-
date map would have warned of the danger.
The jury awarded $35,000 in actual damages, a judg-
ment that was upheld after appeal. Both the jury and
the appeals judge refused to consider the fact that the
award was greater than the flood insurance claim Ms.
Small might have received. The jury, in effect, compen-

"Many lenders," Friedman said, "have chosen to use
half-way measures because they felt there was no
danger to them in the event they made a mistake." Of
the Small decision, Friedman said that lenders should
be put on guard "that they are required to be as careful
with the flood insurance requirements as they are with
any other statutory requirements."





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