Flood FAQs #2 – What is a lender’s responsibility if a particular building or mobile home that secures a loan, due to a map change, is no longer located within an SFHA?

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Q:  What is a lender’s responsibility if a particular building or mobile home that secures a loan, due to a map change, is no longer located within an SFHA?
 
A:   The lender is no longer obligated to require mandatory flood insurance; however, the borrower can elect to convert the existing NFIP policy to a Preferred Risk Policy. For risk management purposes, the lender may, by contract, continue to require flood insurance coverage.
 
 
 
ADDITIONAL INFORMATION – This Q&A was included in the “Interagency Questions and Answers Regarding Flood Insurance.”   For ease of collection, this has been obtained from the FDIC’s Compliance Examination Manual – April 2016, which may be found here:  https://fdic.gov/regulations/compliance/manual/5/V-6.1.pdf
 

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