SECTION 1 - Flood Insurance Requirements for Federally Regulated Lending Institutions

BACKGROUND

The National Flood Insurance Act of 1968 created the National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Agency (FEMA). The NFIP enables property owners in participating communities to purchase flood insurance if the community has adopted floodplain management ordinances and minimum standards for new and substantially damaged or improved construction. Thus, in participating communities, federally-backed flood insurance is available for property owners in flood risk areas.

Congress has since expanded and reformed the NFIP. Part of that Congressional action has been to require the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), Farm Credit Administration, and the National Credit Union Administration (collectively the agencies) to require and revise their flood insurance regulations. The agencies have also issued Interagency Questions and Answers regarding flood insurance (Q&As).

The agencies have amended their regulations from time to time to implement the escrow, force placement, and, most recently, private flood insurance provisions.