This is NOT the first time I've heard of this happening. A homeowner was told that they are in a the 100 year flood zone. I know for a fact they are not. I have seen many insurance companies use old maps and therefore attempt to provide high risk (expensive) flood insurance rates.
This time, I have a friend who is dealing with their Mortgage Company. They are trying to get her to pay for 100 year flood plain rates when she lives in zone x. The insurance company they use verified they are in fact in zone x. Yet, the mortgage company is attempting to force them to use their affiliated insurance company and pay a really inflated price. Her zone has not changed since closing over a year ago.
They should have no power to do this. If this has happened to you, I strongly urge you to call several insurance companies and insist that they verify they are using the most up-to-date zone maps available!
It sounds like a class action law suite type of case to me. It's really a whole lot better for the mortgage company if you are over-insuring your home. And it sounds like an absolute scam.
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Brian,
I only ever had one issue about flood insurance, but learned a lot from it. The house sat at the top of the hill, and the majority of the land it sat on was at the bottom where the stream ran through. The insurance company and appraiser said that the property needs flood insurance. I had to have a drawing made up to show the elevation of the house vs where the stream was and verify that other properties with the same characteristics did not require this. My client was being singled out and unjustifiably so.