"nonbuyer" wrote in message
oups.com...
I'm considering buying a home that requires flood insurance where the
mortgage would be around $300,000.

Let's say the replacement value of the house is above $250,000 for
arguments sake.

My question is how would a bank allow the mortgage since the
replacement value of the house is less than the coverage amount of
$250,000 as specified by FEMA? Would their be risk to the bank that
the house washes away and presents a deficit?

The home replacement in my case is below $250,000 however. My concern
is that upgrades to the property and future increases in home
values/construction costs would eventually generate a situation where
the house is not fully covered for me, the homeowner. The bank would
be covered by the mortgage in my case BUT what if I tried to sell the
property? The next owner may not be able to get a mortgage because of
the coverage gap and thus my home value would be depressed.

You seem to have a defective understanding of
mortgages and insurance. Take your questions
to a mortgage lender and your insurance agent
respectively. Both will explain that your property
insurance has no bearing on any sale of the house
to another party. (His mortgage-worthiness depends
on his credit history, not your insurance.)

--
Don Phillipson
Carlsbad Springs
(Ottawa, Canada)