A Bank (i.e., or any FDIC-supervised institution) may not make, increase, extend, or renew any “designated loan” (as defined in the statute) unless the building or mobile home securing the loan is covered by flood insurance for the term of the loan. A Bank that acquires a loan from a mortgage broker or other entity through table funding is considered to be making a loan.
The National Flood Insurance Act of 1968 (as amended by the Flood Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994, and the Flood Insurance Reform Act of 2004) is made applicable to federally insured banks [42 USCA § 4001, et seq.] under 12 CFR part 339. The purpose of these laws is to require notice of the risk of flooding to borrowers and the availability of flood insurance for loans secured by a building or a mobile home located in a special flood hazard area. The National Flood Insurance Program administered by FEMA offers training for lenders on a variety of topics. For information go to www.fema.gov/know-your-risk/realtor-lending-insurance