Man Fights Flood Insurance Charge

Jason Lopez and his wife spent three years searching for the perfect home.

“It’s a pretty intense process,” Jason said.

The couple eventually closed on their first home in December 2017.

“We were starting off the American dream,” Jason said.

But almost a year later, Jason said he started getting notices from PennyMac, the mortgage company that had taken over his loan, asking him to update his flood insurance policy information.

“I thought it was a bit weird,” he said. “I thought that was already taken care of at the closing.”

Jason said he paid for flood insurance at closing, even though he thought it wasn’t required because his home survey showed the property was in flood zone X. According to FEMA’s website, flood zone X is a designation used for areas of minimal flood hazard.

FEMA’S website showed Jason’s driveway was in a zone requiring flood insurance, but not the structure itself. So Jason decided to call PennyMac to try to sort things out.

“They told me that I needed to go to FEMA and get a letter of map amendment, a LOMA,” he said. “They told me that I needed this form to officially designate my home as flood zone X.”

Jason obtained a LOMA and sent it to PennyMac in March. He also paid $480 for a new flood insurance policy. But in April, Jason received another letter from PennyMac, this time saying they would be charging his escrow account more than $2700 for not having coverage from March 2018 to March 2019.

“I made dozens of phone calls … to try to straighten this whole thing out,” he said. “I just got to the point where I asked them, ‘are you giving me the $2700 back?’ and they finally told me no.”

PennyMac sent NBC 6 Responds several documents, including one Jason and his wife signed at closing acknowledging flood insurance was required for their property. PennyMac also referred our team to a letter they sent Jason in response to his complaint with the Consumer Financial Protection Bureau, explaining what happened and saying, in part: “Although the lapse in coverage was valid due to your property being in a mandatory flood zone prior to March 6, 2019, as a gesture of our goodwill, PennyMac approved a refund of the total amount for the LPP [lender placed policy].”

A few days later, Jason saw the full refund post to his account.

“Thank you so much for your help in trying to help me figure out this whole process,” he said.

His advice to others was simple: “You need to do your research, you need to look into these kinds of things. We came into this very naïve”

To see if a property is in a special flood hazard area, visit FEMA’s flood map service center by clicking here.

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