Development within SFHAs

Contrary to common belief, the government does not prohibit building in a Special Flood Hazard Area. However, strict regulations apply to any new construction or substantial improvements to existing structures within these zones. The most critical requirement is elevation. The lowest floor of the residential structure must be elevated to or above the "Base Flood Elevation" (BFE) determined by the FEMA maps. By building the living area above the predicted flood level, the property is protected against the 1% annual chance flood, reducing the risk of catastrophic damage.Federal law mandates that if a property is located in a Special Flood Hazard Area (zones A or V) and is financed with a federally related mortgage loan, the borrower must maintain flood insurance. Lenders are legally required to verify the flood zone status of a property before closing. If the home is in a high-risk zone, the lender will require proof of a flood insurance policy for the life of the loan. If the borrower lets the policy lapse, the lender has the right to "force place" insurance on the property, often at a much higher cost to the borrower.