NEWS: The NCUA is one of five federal lending regulators (Agencies) that last week joined in updating the Interagency Questions and Answers Regarding Flood Insurance. Click here for a copy of the Q&As.
Significant topics addressed by the May 11 revisions include guidance related to major amendments to the flood insurance laws with regards to:
- the escrow of flood insurance premiums,
- the detached structure exemption,
- force placement procedures, and
- the acceptance of flood insurance policies issued by private insurers.
Credit unions should keep in mind that these Q&As relate to the lending regulations regarding flood insurance. The Federal Emergency Management Agency (FEMA) regulates the National Flood Insurance Program (NFIP) itself.
Since 1997, the Interagency Questions and Answers have provided the lending industry and other interested parties with guidance addressing a wide spectrum of technical flood insurance-related compliance issues. In 2009, the Agencies comprehensively revised and reorganized the initial 1997 Interagency Questions and Answers. In 2011, the Agencies further finalized two additional Q&As that were proposed in 2009, and re-proposed three Q&As that were never finalized.
In the updated Q&A, the Agencies consolidated the July 2020 Proposed Q&As and the March 2021 Proposed Q&As into one set of Interagency Questions and Answers Regarding Flood Insurance, consisting of 144 Questions and Answers, revised as appropriate based on comments received. The Agencies also made non-substantive revisions to certain questions and answers to more directly respond to the question asked, provide additional clarity, or make technical corrections. The Q&As are rearranged and renumbered to provide a more logical flow of questions through the stages of the flood insurance process. Each of the categories has its own set of consecutively numbered Q&As:
- Determining the Applicability of Flood Insurance Requirements for Certain Loans
- Exemptions from the Mandatory Flood Insurance Purchase Requirements
- Private Flood Insurance – Mandatory Acceptance
- Private Flood Insurance – Discretionary Acceptance
- Private Flood Insurance – General Compliance
- Standard Flood Hazard Determination Form (SFHDF)
- Flood Insurance Determination Fees
- Flood Zone Discrepancies
- Notice of Special Flood Hazards and Availability of Federal Disaster Relief
- Determining the Appropriate Amount of Flood Insurance Required
- Flood Insurance Requirements for Construction Loans
- Flood Insurance Requirements for Residential Condominiums and Co-Ops
- Flood Insurance Requirements for Home Equity Loans, Lines of Credit, Subordinate Liens, and Other Security Interests in Collateral Located in an SFHA
- Requirement to Escrow Flood Insurance Premiums and Fees – General
- Requirement to Escrow Flood Insurance Premiums and Fees – Escrow Small Lender Exception
- Requirement to Escrow Flood Insurance Premiums and Fees – Escrow Loan Exceptions
- Force Placement of Flood Insurance
- Flood Insurance Requirements in the Event of the Sale or Transfer of a Designated Loan and/or Its Servicing Rights
- Mandatory Civil Money Penalties
See ii Release No. B003 for general guidance about the NCUA’s flood insurance requirements for real estate and mobile home loans.