FLOOD08456 - Laserfiche WebLink

Home Browse Search

SECTION 206.1 OF THE COMPTROLLER'S HANDBOOK FOR CONSUMER EXAMINATIONS, COMPTROLLER OF THE CURRENCY Flood Disaster Protection Act Introduction Section 206.1 rate map has been published for the community in which the property is located, . The community in which the Ifea is Iocaled par- ticipates in the national flood insurance program. . The property is not covered lor the entire term 01 the Ioen with flood insurence, II the community in which the erea is Iocaled does not participate in the nationel flood insurence progrem. the financial institution is generally not restrict<<l in I'IlIking, increasing. extending or renewing a loan. Although national banks are not required to haw the borrower purchase Ilood insurance in flood areas 01 a n0n- participating community. prudent banking practices suggest that as a condition to approving the Ioen. flood insurance should be, considered to protect the bank's investment. Addttional requirements, however, ere placed on finan- cial institutions lor loans insured or guaranteed by an agency 01 the lederal govemment. auch as VA. FHA and SBA, II such loans, secured or unsecured. assist in the construction or acquisttion 01 improved real estate or a mobile home lOcated in a flood-hazard area. they cannot be made il the community in which the flood hazard area is located does not participate in the nationalllood insurance program. Flood insurance is required on pereonal property l0- cated in a flood hazard area II a flood hazard boundary map or e flood insurence rate map has been published for the community in which the property is located and either of the following conditions exist: . The personal property secures a conventionafloen that is also secured by real property or a mobile home required to be covered by flood insurance. . The loan for the property is insured or guaranteed by an agency of the federal govemment. Loans for personal property that do not inwIve federal financial assistance only are not subject to flood insur- ance regardless of where the property is located, Flood insurance requirements tor a particular c0m- munity are altered by the issuance or withdrawal 01 FEMA's official flood maps, II the FEMA withdraws a flood hazard boundary map lor any reason, the insur- ance purchase requirement is _pended during the period of withdrawal. Howe....r, II the community is in the regular program and only the flood insurance rate map (which controls actuarial rates) is wtthdrawn but a flood insurance boundary map remains in elIect. then flood insurance is still required, The maximum amount 01 insurance avai~ able in that case is lirst layer coverage under the emer- gency program. since the community's regular pro- gram status may be suspended lithe map is withdrawn, ~.'~1OI~68/ftf1l1l1lW -,- Notice Requirements When a loan is secured by Improved 22,4 real estate or a mobile home Iocaled or 10 be Iocaled in a community that has been identified by the Diractor 01 FEMA as an area having tpeCial flood hazards. regardless 01 whether the corrmunity is par. licipating or not participating in the national flood insur- ance program, a financial instttution must mail or deliver before the ctOIing 01 a flood-related loan and within a reaeonabIe time, generally 10 days, a written notica to the bonuwer which _as; . That the property eecuring the loan is or will be Iocaled in a flood hazard area (in lieu 01 such n0- tification, . financial institution may obtain satisfac- tory written assurances from a seller or lessor that the bonuwer has been notified. prior to the ex. ecution 01 any eg~ d lor sale or lease, that the property securing the loan is or will be Iocaled in a IIood hazard area). . Whether federal disaster relief assistance will be available lor such property in the event 01 damage to the property caused by flooding in a federally- declared disaster area (see section 206,5). Whether the corrmunity participatas in the national flood insurance progrem will determine II federal disaster relief assistance is available and which notica the bonuwer will receiva, Written Acknowledgement In addition, a financial institution must obtain lrom the boI rower, prior to cloeing, a written acknowledgement that the property securing the loan is or will be located in a IIood hazard area and that the borrower has ,. ceNed the mandatory notice regarding federal disaster relief assiIt8nce. Amount of FIooc:Ilnlurance When IIood insurance is required, the 42 use <10128 policy must cover the amount 01 the loan or the maximum amount available under the national flood insurance program. whichever is less, When a community participates in the emergency pro- gram under the national flood insurance program, the amount 01 flood inaurance available may not cover the amount 01 a flood related loan linee only first layer _age is available under the emergency program. In the event the community subtequentty enters the regu- lar program, the financial instttution has no Obligation to inc_ the amount 01 flood insurance required, How. _r, k has the option to do SO to protect tts investment. i ~ I . j 3 ,5,