Requirements
A credit union must follow the regulatory requirements of the Flood Acts. As of July 1, 2019, a credit union can accept private flood insurance and mutual aid society flood plans in addition to traditional NFIP policies. For more information, see NCUA Regulatory Alert 19-RA-01, Flood Insurance Alternatives.
Credit unions that offer loans secured by buildings or mobile homes must:
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Use the SFHDF to determine whether the building or mobile home offered as collateral is or will be located in an SFHA where flood insurance is available under the Flood Acts.
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Require the proper amount of flood insurance for the term of the loan.
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Other than specific exceptions by lender size or transaction type, require the escrowing of flood insurance premiums and fees for designated loans made, increased, extended, or renewed. When a credit union no longer qualifies for the small lender exception, it must offer and make available the option to escrow for flood insurance premiums and fees for loans outstanding.
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Purchase required minimum amount of flood insurance on the borrower’s behalf if the borrower fails to obtain flood insurance (known as force placement).
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Notify the Administrator of FEMA in writing of the identity of the servicer of a designated loan.
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Mail or deliver a written notice to the borrower and servicer whether or not flood insurance is available under the acts for the collateral securing the loan. Refer to NCUA regulation § 760.9, Notice of special flood hazards and availability of Federal disaster relief assistance, for notice requirements. Examiners may also refer to the Examination Procedures for specifics.
An SFHA is an area within a flood plain having a one percent or greater chance of a flood occurring in any given year.
Last updated on December 01, 2022
