Int Q&A – Mandatory 4 – Is a lender required to accept a flood insurance policy issued by a private insurer that includes the compliance aid statement?

Compliance > Lending > Flood > FAQs
Q:  MANDATORY 4. Is a lender required to accept a flood insurance policy issued by a private insurer that includes the compliance aid statement? Conversely, may a lender reject a flood insurance policy issued by a private insurer solely because it does not contain the compliance aid statement?
 
A:   If a flood insurance policy issued by a private insurer includes the compliance aid statement, the lender may choose to rely upon the statement and would not need to review the policy further to determine if the policy meets the definition of “private flood insurance.”
 
However, the lender is not required to accept this policy based upon inclusion of the compliance aid statement alone and may choose to make its own determination about whether the policy meets the definition of “private flood insurance” or whether the policy is acceptable under the discretionary acceptance or mutual aid criteria.

If a flood insurance policy issued by a private insurer does not include the compliance aid statement, the lender may not reject the policy solely because it does not include this statement. The lender is not relieved from the requirement to accept a policy that meets the definition of “private flood insurance,” as long as the policy meets the amount of insurance required under the Regulation. Further, the lender may determine the policy is acceptable under the discretionary acceptance or mutual aid criteria.
 
 
 
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
 

Add Feedback