Federal financial institutions have issued a stark reminder that lending can continue under federal flood insurance statutes, even when the National Flood Insurance Program (NFIP) is unavailable. This critical directive was jointly released by the Farm Credit Administration, Federal Deposit Insurance Corporation, Federal Reserve Board, National Credit Union Administration, and Office of the Comptroller of the Currency.
Despite the NFIP’s temporary absence, lenders are permitted to grant loans without mandating federal flood insurance. As per the Interagency Questions and Answers Regarding Flood Insurance, specifically Q&A Applicability 12, lenders must still conduct flood determinations and provide borrowers with timely, complete, and accurate notices during this period. They also need to adhere to other flood insurance regulations.
The agencies emphasized the importance of prudently managing risks associated with safety and soundness during the lapse. This includes evaluating legal risks and seeking private flood insurance where needed. The guidance aims to ensure that lenders can continue their operations while mitigating potential financial risks.
Key contacts for further information include Ben Mosely at the FCA, LaJuan Williams-Young at the FDIC, Chelsea Grate at the FRB, Sierra Robinson at NCUA, and Monica McCoy at the OCC.
This directive serves as a crucial reminder to lenders and financial institutions across the nation, emphasizing the need for due diligence and compliance during periods of federal flood insurance interruption.
Last Updated: October 1, 2025
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