 |
United States Code (Last Updated: May 24, 2014) |
 |
Title 42. THE PUBLIC HEALTH AND WELFARE |
|
Chapter 50. NATIONAL FLOOD INSURANCE |
|
SubChapter I. THE NATIONAL FLOOD INSURANCE PROGRAM |
§ 4012a. Flood insurance purchase and compliance requirements and escrow accounts
-
(a) Amount and term of coverage After the expiration of sixty days following
December 31, 1973 , no Federal officer or agency shall approve any financial assistance for acquisition or construction purposes for use in any area that has been identified by the Administrator as an area having special flood hazards and in which the sale of flood insurance has been made available under the National Flood Insurance Act of 1968 [42 U.S.C. 4001 et seq.], unless the building or mobile home and any personal property to which such financial assistance relates is covered by flood insurance in an amount at least equal to its development or project cost (less estimated land cost) or to the maximum limit of coverage made available with respect to the particular type of property under the National Flood Insurance Act of 1968, whichever is less: Provided, That if the financial assistance provided is in the form of a loan or an insurance or guaranty of a loan, the amount of flood insurance required need not exceed the outstanding principal balance of the loan and need not be required beyond the term of the loan. The requirement of maintaining flood insurance shall apply during the life of the property, regardless of transfer of ownership of such property.(b) Requirement for mortgage loans (1) Regulated lending institutions Each Federal entity for lending regulation (after consultation and coordination with the Financial Institutions Examination Council established under the Federal Financial Institutions Examination Council Act of 1974 [12 U.S.C. 3301 et seq.]) shall by regulation direct regulated lending institutions— (A) not to make, increase, extend, or renew any loan secured by improved real estate or a mobile home located or to be located in an area that has been identified by the Administrator as an area having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act of 1968 [42 U.S.C. 4001 et seq.], unless the building or mobile home and any personal property securing such loan is covered for the term of the loan by flood insurance in an amount at least equal to the outstanding principal balance of the loan or the maximum limit of coverage made available under the Act with respect to the particular type of property, whichever is less; and (B) to accept private flood insurance as satisfaction of the flood insurance coverage requirement under subparagraph (A) if the coverage provided by such private flood insurance meets the requirements for coverage under such subparagraph. (2) Federal agency lenders A Federal agency lender may not make, increase, extend, or renew any loan secured by improved real estate or a mobile home located or to be located in an area that has been identified by the Administrator as an area having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act of 1968, unless the building or mobile home and any personal property securing such loan is covered for the term of the loan by flood insurance in the amount provided in paragraph (1)(A). Each Federal agency lender shall accept private flood insurance as satisfaction of the flood insurance coverage requirement under the preceding sentence if the flood insurance coverage provided by such private flood insurance meets the requirements for coverage under such sentence. Each Federal agency lender shall issue any regulations necessary to carry out this paragraph. Such regulations shall be consistent with and substantially identical to the regulations issued under paragraph (1)(A).
(3) Government-sponsored enterprises for housing The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation shall implement procedures reasonably designed to ensure that, for any loan that is— (A) secured by improved real estate or a mobile home located in an area that has been identified, at the time of the origination of the loan or at any time during the term of the loan, by the Administrator as an area having special flood hazards and in which flood insurance is available under the National Flood Insurance Act of 1968, and (B) purchased by such entity, the building or mobile home and any personal property securing the loan is covered for the term of the loan by flood insurance in the amount provided in paragraph (1)(A). The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation shall accept private flood insurance as satisfaction of the flood insurance coverage requirement under paragraph (1)(A) if the flood insurance coverage provided by such private flood insurance meets the requirements for coverage under such paragraph and any requirements established by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, respectively, relating to the financial solvency, strength, or claims-paying ability of private insurance companies from which the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation will accept private flood insurance. (4) Applicability (A) Existing coverage Except as provided in subparagraph (B), paragraph (1) shall apply on
September 23, 1994 .(B) New coverage Paragraphs (2) and (3) shall apply only with respect to any loan made, increased, extended, or renewed after the expiration of the 1-year period beginning on
September 23, 1994 . Paragraph (1) shall apply with respect to any loan made, increased, extended, or renewed by any lender supervised by the Farm Credit Administration only after the expiration of the period under this subparagraph.(C) Continued effect of regulations Notwithstanding any other provision of this subsection, the regulations to carry out paragraph (1), as in effect immediately before
September 23, 1994 , shall continue to apply until the regulations issued to carry out paragraph (1) as amended by section 522(a) of Public Law 103–325 take effect.(5) Rule of construction Nothing in this subsection shall be construed to supersede or limit the authority of a Federal entity for lending regulation, the Federal Housing Finance Agency, a Federal agency lender, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation to establish requirements relating to the financial solvency, strength, or claims-paying ability of private insurance companies from which the entity or agency will accept private flood insurance.
(6) Notice (A) In general Each lender shall disclose to a borrower that is subject to this subsection that— (i) flood insurance is available from private insurance companies that issue standard flood insurance policies on behalf of the national flood insurance program or directly from the national flood insurance program; (ii) flood insurance that provides the same level of coverage as a standard flood insurance policy under the national flood insurance program may be available from a private insurance company that issues policies on behalf of the company; and (iii) the borrower is encouraged to compare the flood insurance coverage, deductibles, exclusions, conditions and premiums associated with flood insurance policies issued on behalf of the national flood insurance program and policies issued on behalf of private insurance companies and to direct inquiries regarding the availability, cost, and comparisons of flood insurance coverage to an insurance agent. (B) Rule of construction Nothing in this paragraph shall be construed as affecting or otherwise limiting the authority of a Federal entity for lending regulation to approve any disclosure made by a regulated lending institution for purposes of complying with subparagraph (A).
(7) Private flood insurance defined In this subsection, the term “private flood insurance” means an insurance policy that— (A) is issued by an insurance company that is— (i) licensed, admitted, or otherwise approved to engage in the business of insurance in the State or jurisdiction in which the insured building is located, by the insurance regulator of that State or jurisdiction; or (ii) in the case of a policy of difference in conditions, multiple peril, all risk, or other blanket coverage insuring nonresidential commercial property, is [42 U.S.C. 4101(f)] of the floodplain areas and flood-risk zones or publication of a notice or compendia under subsection (h) or (i) of section 1360 [42 U.S.C. 4101(h), (i)] that affects the area in which the improved real estate or mobile home securing the loan is located or that, in the determination of the Administrator, may reasonably be considered to require a determination under this subsection; or (C) results in the purchase of flood insurance coverage pursuant to the requirement under subsection (e)(2) of this section. (2) Purchaser or transferee fee The purchaser or transferee of such a loan may be charged the fee in the case of sale or transfer of the loan.
Prospective Amendment
Pub. L. 112–141, div. F, title II, § 100209(a),
(1) Regulated lending institutions
(A) Federal entities responsible for lending regulations
Each Federal entity for lending regulation (after consultation and coordination with the Federal Financial Institutions Examination Council) shall, by regulation, direct that all premiums and fees for flood insurance under the National Flood Insurance Act of 1968, for residential improved real estate or a mobile home, shall be paid to the regulated lending institution or servicer for any loan secured by the residential improved real estate or mobile home, with the same frequency as payments on the loan are made, for the duration of the loan. Except as provided in subparagraph (B), upon receipt of any premiums or fees, the regulated lending institution or servicer shall deposit such premiums and fees in an escrow account on behalf of the borrower. Upon receipt of a notice from the Administrator or the provider of the flood insurance that insurance premiums are due, the premiums deposited in the escrow account shall be paid to the provider of the flood insurance.
(B) Limitation
Except as may be required under applicable State law, a Federal entity for lending regulation may not direct or require a regulated lending institution to deposit premiums or fees for flood insurance under the National Flood Insurance Act of 1968 in an escrow account on behalf of a borrower under subparagraph (A)—
(i) if—
(I) the regulated lending institution has total assets of less than $1,000,000,000; and
(II) on or before
(aa) in the case of a loan secured by residential improved real estate or a mobile home, was not required under Federal or State law to deposit taxes, insurance premiums, fees, or any other charges in an escrow account for the entire term of the loan; and
(bb) did not have a policy of consistently and uniformly requiring the deposit of taxes, insurance premiums, fees, or any other charges in an escrow account for loans secured by residential improved real estate or a mobile home; or
(ii) in the case of a loan that—
(I) is in a junior or subordinate position to a senior lien secured by the same residential improved real estate or mobile home for which flood insurance is being provided at the time of the origination of the loan;
(II) is secured by residential improved real estate or a mobile home that is part of a condominium, cooperative, or other project development, if the residential improved real estate or mobile home is covered by a flood insurance policy that—
(aa) meets the requirements that the regulated lending institution is required to enforce under subsection (b)(1);
(bb) is provided by the condominium association, cooperative, homeowners association, or other applicable group; and
(cc) the premium for which is paid by the condominium association, cooperative, homeowners association, or other applicable group as a common expense;
(III) is secured by residential improved real estate or a mobile home that is used as collateral for a business purpose;
(IV) is a home equity line of credit;
(V) is a nonperforming loan; or
(VI) has a term of not longer than 12 months.
See 2012, 2013, and 2014 Amendment notes below.
References In Text
The National Flood Insurance Act of 1968, referred to in subsecs. (a), (b), (d)(1), and (e)(1), and the Act, referred to in subsec. (b), is title XIII of Pub. L. 90–448,
The Federal Financial Institutions Examination Council Act of 1974, referred to in subsec. (b)(1), probably means the Federal Financial Institutions Examination Council Act of 1978, Pub. L. 95–630, title X,
Section 522(a) of Public Law 103–325, referred to in subsec. (b)(4)(C), was in original “section 522(a) of such Act”, which generally amended subsec. (b) of this section.
This title, referred to in subsec. (e)(5)(B), (C), means title I of Pub. L. 93–234,
Codification
Section was enacted as part of the Flood Disaster Protection Act of 1973, and not as part of the National Flood Insurance Act of 1968 which comprises this chapter.
Amendments
2014—Subsec. (c)(3). Pub. L. 113–89, § 13(a), added par. (3).
Subsec. (d)(1)(A). Pub. L. 113–89, § 25(a)(1), substituted “subparagraph (B)” for “subparagraph (C)”.
Subsec. (d)(1)(B). Pub. L. 113–89, § 25(a)(2), substituted “under subparagraph (A)—” for “under subparagraph (A) or (B), if—” in introductory provisions, designated existing provisions as cl. (i) and inserted “if—” after cl. (i) designation, redesignated former cls. (i) and (ii) as subcls. (I) and (II), respectively, of cl. (i), redesignated former subcls. (I) and (II) as items (aa) and (bb), respectively, of subcl. (II), and added cl. (ii).
2013—Subsec. (d)(1)(A). Pub. L. 112–281 inserted “residential” before “improved real estate” in two places.
2012—Subsec. (a). Pub. L. 112–141, § 100238(a)(1), substituted “Administrator” for “Director”.
Subsec. (b)(1). Pub. L. 112–141, § 100239(a)(1), substituted “; and” for period at end, substituted “institutions—” for “institutions”, inserted subpar. (A) designation before “not to make”, and added subpar. (B).
Pub. L. 112–141, § 100238(a)(1), substituted “Administrator” for “Director”.
Subsec. (b)(2). Pub. L. 112–141, § 100239(a)(2), substituted “paragraph (1)(A)” for “paragraph (1)” in two places and inserted “Each Federal agency lender shall accept private flood insurance as satisfaction of the flood insurance coverage requirement under the preceding sentence if the flood insurance coverage provided by such private flood insurance meets the requirements for coverage under such sentence.” after first sentence.
Pub. L. 112–141, § 100238(a)(1), substituted “Administrator” for “Director”.
Subsec. (b)(3). Pub. L. 112–141, § 100239(a)(3), substituted “paragraph (1)(A). The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation shall accept private flood insurance as satisfaction of the flood insurance coverage requirement under paragraph (1)(A) if the flood insurance coverage provided by such private flood insurance meets the requirements for coverage under such paragraph and any requirements established by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, respectively, relating to the financial solvency, strength, or claims-paying ability of private insurance companies from which the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation will accept private flood insurance.” for “paragraph (1).” in concluding provisions.
Subsec. (b)(3)(A). Pub. L. 112–141, § 100238(a)(1), substituted “Administrator” for “Director”.
Subsec. (b)(5) to (7). Pub. L. 112–141, § 100239(a)(4), added pars. (5) to (7).
Subsec. (c)(1). Pub. L. 112–141, § 100238(a)(1), substituted “Administrator” for “Director” in two places.
Subsec. (d)(1). Pub. L. 112–141, § 100238(a)(1), substituted “Administrator” for “Director”.
Pub. L. 112–141, § 100209(a), amended par. (1) generally. Prior to amendment, text read as follows: “Each Federal entity for lending regulation (after consultation and coordination with the Financial Institutions Examination Council) shall by regulation require that, if a regulated lending institution requires the escrowing of taxes, insurance premiums, fees, or any other charges for a loan secured by residential improved real estate or a mobile home, then all premiums and fees for flood insurance under the National Flood Insurance Act of 1968 for the real estate or mobile home shall be paid to the regulated lending institution or other servicer for the loan in a manner sufficient to make payments as due for the duration of the loan. Upon receipt of the premiums, the regulated lending institution or servicer of the loan shall deposit the premiums in an escrow account on behalf of the borrower. Upon receipt of a notice from the Administrator or the provider of the insurance that insurance premiums are due, the regulated lending institution or servicer shall pay from the escrow account to the provider of the insurance the amount of insurance premiums owed.”
Subsec. (e)(1). Pub. L. 112–141, § 100238(a)(1), substituted “Administrator” for “Director”.
Subsec. (e)(2). Pub. L. 112–141, § 100244(a)(1), substituted “purchasing the insurance, including premiums or fees incurred for coverage beginning on the date on which flood insurance coverage lapsed or did not provide a sufficient coverage amount” for “purchasing the insurance”.
Subsec. (e)(3). Pub. L. 112–141, § 100244(a)(3), added par. (3). Former par. (3) redesignated (5).
Subsec. (e)(3). Pub. L. 112–141, § 100238(a)(1), substituted “Administrator” for “Director” wherever appearing.
Subsec. (e)(4) to (6). Pub. L. 112–141, § 100244(a)(2), (3), added par. (4) and redesignated former pars. (3) and (4) as (5) and (6), respectively.
Subsec. (f)(5). Pub. L. 112–141, § 100208, substituted “$2,000” for “$350” and struck out at end “The total amount of penalties assessed under this subsection against any single regulated lending institution or enterprise during any calendar year may not exceed $100,000.”
Subsec. (h)(1)(B). Pub. L. 112–141, § 100238(a)(1), substituted “Administrator” for “Director”.
2008—Subsec. (f)(3)(A). Pub. L. 110–289 substituted “Director of the Federal Housing Finance Agency” for “Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development”.
1994—Pub. L. 103–325, § 531, substituted section catchline for former section catchline.
Subsec. (a). Pub. L. 103–325, § 582(c), struck out “, during the anticipated economic or useful life of the project,” before “covered by flood insurance” and inserted at end “The requirement of maintaining flood insurance shall apply during the life of the property, regardless of transfer of ownership of such property.”
Subsec. (b). Pub. L. 103–325, § 522(a), amended subsec. (b) generally. Prior to amendment, subsec. (b) read as follows: “Each Federal instrumentality responsible for the supervision, approval, regulation, or insuring of banks, savings and loan associations, or similar institutions shall by regulation direct such institutions not to make, increase, extend, or renew after the expiration of sixty days following
Subsec. (c). Pub. L. 103–325, § 522(b), inserted heading, designated existing provisions as par. (1), inserted par. (1) heading, and added par. (2).
Subsecs. (d) to (h). Pub. L. 103–325, §§ 523–526, added subsecs. (d) to (h).
1983—Pub. L. 98–181 substituted “Director” for “Secretary” wherever appearing.
Effective Date Of Amendment
Pub. L. 113–89, § 25(b)(1),
Pub. L. 112–141, div. F, title II, § 100209(b),
Amendment by section 582(c) of Pub. L. 103–325 applicable to disasters declared after
Miscellaneous
Pub. L. 113–89, § 25(b)(3),
Transfer Of Functions
For transfer of all functions, personnel, assets, components, authorities, grant programs, and liabilities of the Federal Emergency Management Agency, including the functions of the Under Secretary for Federal Emergency Management relating thereto, to the Federal Emergency Management Agency, see section 315(a)(1) of Title 6, Domestic Security.
For transfer of functions, personnel, assets, and liabilities of the Federal Emergency Management Agency, including the functions of the Director of the Federal Emergency Management Agency relating thereto, to the Secretary of Homeland Security, and for treatment of related references, see former section 313(1) and sections 551(d), 552(d), and 557 of Title 6, Domestic Security, and the Department of Homeland Security Reorganization Plan of
Miscellaneous
Pub. L. 113–89, § 21,