When the NFIP is not available, credit unions may continue to make loans subject to the Flood Act and 12 C.F.R. Part 760 without flood insurance. This is not considered a violation of Part 760, but lenders must continue to make flood determinations, provide timely, complete, and accurate notices to borrowers, and comply with other parts of the flood insurance regulations. In addition, they must evaluate safety and soundness and legal risks and prudently manage those risks during the lapse period. Further, lenders need to have a system in place so that policies are obtained as soon as available following reauthorization for properties subject to mandatory flood insurance coverage. See the enclosure for details.
NCUA: Letter to Credit Unions No. 10-CU-08 – Encl: Guidance on the Lapse of FEMA`s Authority to Issue Flood Insurance Contracts
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