Is Flood Insurance Required if a Flood Map Zone Changes?

Question:

• 1) Our life-of-loan flood zone monitoring vendor notified the credit union that a certain member’s property securing his mortgage loan is newly in a flood zone. Is flood insurance required even though there is not a “triggering” event (making, increasing, renewing, or extending a covered loan)?
• 2) Our member is disputing the new flood zone determination with FEMA. Will the credit union need to force place flood insurance if the member refuses to buy it?

Answer:

1) Yes. See “FORCE PLACEMENT 16” on page 252 of the 2022 Interagency Flood Insurance FAQs:

• FORCE PLACEMENT 16.  If a lender or its servicer receives a notice of remapping that states that a property has been or will be remapped into an SFHA, what do the Act and Regulation require the lender or its servicer to do?
• The Act and Regulation provide that if a lender, or its servicer, determines at any time during the term of a designated loan, that a building or mobile home and any personal property securing a loan is uninsured or underinsured, the lender or its servicer must begin the notice and force placement process, as detailed in Q&A Force Placement 1.

2) Yes. See question “ZONE 3” on page 191:

• ZONE 3.  What should a lender do when the lender’s flood zone determination specifies that a building securing the loan is located in an SFHA requiring mandatory flood insurance coverage, but the borrower disputes that determination?
• If a borrower disputes a lender’s determination that the building securing the loan is located in an SFHA requiring mandatory flood insurance coverage, the parties involved in making the determination are encouraged to resolve the flood zone discrepancy before contacting FEMA for a final determination.  If the flood zone discrepancy cannot be resolved, an appeal may be filed with FEMA.
• However, as long as the lender’s flood determination specifies that a building securing the loan is located in an SFHA and requires mandatory flood insurance coverage, sufficient coverage must be in place in accordance with the Act and the Regulation until FEMA has determined that the building is not in an SFHA.

Access the ‘Compliance Hotline’

Your League-member benefits include the Compliance Hotline — providing exclusive access to dedicated compliance experts:

• 844-731-6072
• CANV@viclarityus.com

Using the above phone number and email address, you can gain access to a knowledgeable team that’s ready to address all your credit union’s compliance inquiries — promptly and efficiently. With the Compliance Hotline, you can proactively respond to impromptu questions and issues by getting clarity and insight on technical topics that normally slow you down. We want to help you unlock the full potential of your League membership by leveraging the resources and support you need to navigate the complex world of compliance effortlessly. We’re ALWAYS just a phone call or email away!

Additionally, other League-member compliance resources include:

• ViClarity
• CU PolicyPro
• ComplySight
• InfoSight
• CU Store
• Record Retention Guide
• GRC Technology Solutions

For more information, email Lisa Quaranta.

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