A summer of flood devastation in the Midwest left thousands of homeowners and businesses devastated, and mortgage lenders reassessing the importance of adequate flood insurance.

Stockholder Systems Inc., Norcross, Ga., a unit of Nynex, responded to that situation by making it easier for mortgage bankers to obtain flood-zone certifications.

A new export feature on the PC version o.f Stockholder Systems' mortgage- origination software enables bankers to transmit property information via modern to Palma-LaZar & Ulsh, a Southhampton, Pa., firm that specializes in flood-zone certification and other mortgage-related programs.

With the new feature, called FloodSrv, the firm supplies flood-zone certification for the property, delivering the certificate electronically within 24 to 48 hours after receiving it.

Floodsrv was developed by a partnership of Palma-LaZar & Ulsh, Stockholder Systems, and Richardson & Associates, a flood insurance carrier in Myrtle Beach, S.C.

The practice of flood-zone certification arose in response to the Flood Disaster Protection Act, which was passed in 1973. As part of the mortgage-origination process, lenders protect themselves and their borrowers by obtaining official certificates stating whether a property is situated in a flood-prone area.

Most Useful for Heavy Volume Lenders

Provider companies such as Palma-LaZar & Ulsh use official Federal Emergency Management Agency flood maps, tax maps, and other tools to determine the likelihood of flooding for each parcel. They issue a certificate that states, in essence, whether the property should be insured.

"Large mortgage banks and lenders who are processing a large volume of loans will probably get the most use out of an electronic service like this," said Stockholder Systems' customer Greg Sweet, a senior vice president at Guardian Mortgage Co. Inc. in Richardson, Tex.

According to the Federal Emergency Management Agency, only 8.7% of the businesses and homeowners that were affected by the floods this past summer had insurance In South Dakota, only 1.8% were covered.

Jimmy Locklear, a vice president at Stockholder Systems, said that a bill is before Congress to strengthen the National Flood Insurance Program. The measure is designed to increase compliance and provide incentives for community floodplain management. "One key issue will be the reinforcement of flood-zone certification requirements for all property at risk." Mr. Locklear explained. "FloodSrv is designed to speed up and streamline the transmission of critical information."

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