FLOOD08456

• County: Statewide
• Basin: Statewide
• Title: Federal Regulations and Instructions on Flood Insurance Compliance for Lenders and Servicers
• Date: 3/1/1991
• Prepared For: NFIP
• Prepared By: FEMA
• Floodplain - Doc Type: Historic FEMA Regulatory Floodplain Information

SECTION 206.1 OF THE COMPTROLLER'S HANDBOOK FOR CONSUMER EXAMINATIONS,
COMPTROLLER OF THE CURRENCY

Flood Disaster Protection Act
Introduction

SeCtion 206.1

The Flood Disaster Protection ....ct ot 42 USC 4002
1973 (FDPA) becama affect... on De. 12 CFR 22
camber 31.1973 The act requires reg.
ulators of federal financial institutions to ptOilIulgate
regul.tions prohibiting:

. Feder.lly regulated lending institutions 110m mak,
ing. increasing. extending or renewing any lOan
(applicabil ity of the FOP.&. is not limiled to consumer
lOans) secured by impn:wed real estata or a residen-
tial mobile home located or to be located in a flood
hazard area of a community participating in the
national flood insurance program (NFIP~ unless the
property securing the 1000n is CO\Iered by flood insur-
ance,

. The use of federal financiallSsistance for acquisi-
tion or construction of a structure in a flood haZard
area. unless the community participates in the na-
tional flood insurance program and flood insurance
hes been purchesed, The term "feder.1 financi.1
.ssistance" includes lo.ns. gr.nts. gu.rantees.
.nd similar forms of direct .nd indirect assist.nce
110m federal agencies, such as FH.... or V.... mortg.ge
insur.nce, For communities p.rticip.ting in the
NFIP. that term also includes con..ntional lOans
from federally insured. supervised or .pproved
lending institutions,

The principal objecti..s of the FOP.&. .re.

. To provide .dequ.te amounts of feder.lly subsi-
dized flood insur.nce III owners of impn:MId re.1
property loc.ted in flood haz.rd ....s 01 communi-
ties that participate in the n.tional flood insur.nce
program,

. To reduce or avoid future flood losses .nd provide.
pl8ll8ntative anern.ti.. to m.ssi.. doses oIlederal
disaster relief funds norm.lly made avail.ble to
flood stricken BAlas,

Flood Insurance Programs

The FDPA e.pands the provisions 01 the origin.1 N.tion.
.1 Flood Insurance Act of 1968 (NFIA), Those provisions
created the nation.1 flood insur.nce progr.m. originally
oper.ted by the Dep.rtment 01 Housing .nd Urban De-
velopment. It is now administel8d by the Federal Emer-
gency Man.gement ....gency (FEM....) .nd flood insu~
.nce policies are underwriften by the United States
gD\/8mment. Direct participants of the national flood
insurance progr.m .re state and 1oc.1 gD\/8mments.
lenders .nd insurance agents,

In .ddition to supervising the insur.nce ISpeets of the
national flood insurance program. FEM.....

. Identifies, communities with special flood h.zard
areas,

~.HM:f00ali:1of~~
-.-

. Issues m.ps for those areas,

. Helps communities qualify for the n.tional flood
insur.nce program,

. Assists communities adopting flood plain manage-
ment IWQuirements,

In cooperation with FEMA. _ry st.te has .ppointed an
agency th.t ......s as . liaison between the federal
government and communities in the state for d_loping
the national flood insurance P/Ollram, Those coordinat-
ing .gencies wort< with FEMA in distributing program
infonnation. (See Appandi. 505,206.2 for a list of FEMA
regional ollices.)

Licensed property .nd casualty insurance agents and
brokers provide the main connection between the pro.
gram and the insured, Licensed agents sell flood insur,
ance. complete the insured's application form. handle
claims. and follOW up with the insured for renewals,

There are two pheses 01 the nationalfloocl insurance
program. Communities entering that program become
eligiblafor the sale of flood insurance in the emergency
flood insurance program (emergency program). which
..rves primarily as an interim program, n provides lower
limits of insurance coverage (lirst layer) on eligible
structures at federally subsidized rates. The FEMA is-
_s flood hazard boundary maps in conjunction with
the el!lergency program, Thosa maps are used to deter,
mine whether properties are located .n a flood pla.n area
having special flood or mudslide hazards,

The second ph_ of the national flood insurance pro-
gr.m is the regular program. A community enters the
l8gul.r P/Ollram once. detailed study of that communi-
ty has been complet.d .nd flood insur.nce rate maps
for the ...a ha\/8 been issued by the FEM"" The regular
P/Ollram provides full insur.nce coverage (first and sec,
ond layers), flood insurance r.te maps, .nd additional
flood pl.in menagement ..quirements for the communi.
ty, The maps deline.te communities by dagrees ofprob-
.bility of flood hazard .nd include more specific area
identific.tion on the flood hazard boundary maps, They
.Iso indicate base flood al_tions. whare there IS at
lelSt. one percent Chence of flood loss each year, (See
....ppendi. 505.206,1 for a dacision chart for determining
whether flood insur.nce is I8quired,)

Scope

The FDPA expands tha provisions of the NFIA by:
. Requiring flood-prone communities to participate
in the national flood insurance program as a condl.
tion of future federallinancial assistanca for flood.
I8I.ted damage to property,

. Requiring land use measures in certa.n f1ood.prone

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