Int Q&A – Applicability 8 – Is a lender required by the Act or the Regulation to perform a review of its, or of its servicer’s, existing loan portfolio for compliance with the flood insurance requirements under the Act and Regulation?

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Q:  APPLICABILITY 8. Is a lender required by the Act or the Regulation to perform a review of its, or of its servicer’s, existing loan portfolio for compliance with the flood insurance requirements under the Act and Regulation?
 
A:   No. Apart from the requirements mandated when a loan is made, increased, extended, or renewed, a lender need only review and take action on any part of its existing portfolio for safety and soundness purposes, or if it knows or has reason to know of the need for NFIP coverage. Regardless of the lack of such requirement in the Act and Regulation, however, sound risk management practices may lead a lender to conduct scheduled periodic reviews that track the need for flood insurance on a loan portfolio.
 
 
ADDITIONAL INFORMATION:
This Q&A was included in the Interagency Questions and Answers Regarding Flood Insurance, which were issued on 05/11/2022.  They were published in the Federal Register on 05/31/2022 and may be found here:  https://www.federalregister.gov/documents/2022/05/31/2022-10414/loans-in-areas-having-special-flood-hazards-interagency-questions-and-answers-regarding-flood
 

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