Environmental
A property is located in FEMA Flood Zone AE. What does this mean for a buyer obtaining a federally backed mortgage?
AFlood insurance is recommended but not required
BFlood insurance is mandatory✓ Correct
CThe property is ineligible for federally backed financing
DThere is no flood risk in Zone AE
Explanation
Properties in FEMA Special Flood Hazard Areas (SFHAs) such as Zone AE are in high-risk flood zones. Federal law (National Flood Insurance Reform Act) requires mandatory flood insurance for any federally backed mortgage on property in these zones.
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