12 Cfr 760 (1-1-18 Ed)

Pt. 760

12 CFR Ch. VII (1–1–18 Edition)

claims against such liquidating agent
or conservator. Nothing in this part
may be construed to permit the payment of salary or any liability or legal
expense of any IAP contrary to 12
U.S.C. 1786(t)(3).

PART 760—LOANS IN AREAS
HAVING SPECIAL FLOOD HAZARDS
Sec.
760.1 Authority, purpose, and scope.
760.2 Definitions.
760.3 Requirement to purchase flood insurance where available.
760.4 Exemptions.
760.5 Escrow requirement.
760.6 Required use of standard flood hazard
determination form.
760.7 Force placement of flood insurance.
760.8 Determination fees.
760.9 Notice of special flood hazards and
availability of Federal disaster relief assistance.
760.10 Notice of servicer’s identity.
APPENDIX A TO PART 760—SAMPLE FORM OF
NOTICE OF SPECIAL FLOOD HAZARDS AND
AVAILABILITY OF FEDERAL DISASTER RELIEF ASSISTANCE
APPENDIX B TO PART 760—SAMPLE CLAUSE
FOR OPTION TO ESCROW FOR OUTSTANDING
LOANS
AUTHORITY: 12 U.S.C. 1757, 1789; 42 U.S.C.
4012a, 4104a, 4104b, 4106, and 4128.

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SOURCE: 80 FR 43259, July 21, 2015, unless
otherwise noted.

§ 760.1 Authority, purpose, and scope.
(a) Authority. This part is issued pursuant to 12 U.S.C. 1757, 1789 and 42
U.S.C. 4012a, 4104a, 4104b, 4106, 4128.
(b) Purpose. The purpose of this part
is to implement the requirements of
the National Flood Insurance Act of
1968 and the Flood Disaster Protection
Act of 1973, as amended (42 U.S.C. 4001–
4129).
(c) Scope. This part, except for §§ 760.6
and 760.8, applies to loans secured by
buildings or mobile homes located or
to be located in areas determined by
the Administrator of the Federal
Emergency Management Agency to
have special flood hazards. Sections
760.6 and 760.8 apply to loans secured by
buildings or mobile homes, regardless
of location.
§ 760.2 Definitions.
As used in this part:

Act means the National Flood Insurance Act of 1968, as amended (42 U.S.C.
4001–4129).
Administrator of FEMA means the Administrator of the Federal Emergency
Management Agency.
Building means a walled and roofed
structure, other than a gas or liquid
storage tank, that is principally above
ground and affixed to a permanent site,
and a walled and roofed structure while
in the course of construction, alteration, or repair.
Community means a State or a political subdivision of a State that has
zoning and building code jurisdiction
over a particular area having special
flood hazards.
Credit union means a Federal or
State-chartered credit union that is insured by the National Credit Union
Share Insurance Fund.
Designated loan means a loan secured
by a building or mobile home that is
located or to be located in a special
flood hazard area in which flood insurance is available under the Act.
Mobile home means a structure, transportable in one or more sections, that
is built on a permanent chassis and designed for use with or without a permanent foundation when attached to the
required utilities. The term mobile home
does not include a recreational vehicle.
For purposes of this part, the term mobile home means a mobile home on a
permanent foundation. The term mobile
home includes a manufactured home as
that term is used in the NFIP.
NFIP means the National Flood Insurance Program authorized under the
Act.
Residential improved real estate means
real estate upon which a home or other
residential building is located or to be
located.
Servicer means the person responsible
for:
(1) Receiving any scheduled, periodic
payments from a borrower under the
terms of a loan, including amounts for
taxes, insurance premiums, and other
charges with respect to the property
securing the loan; and
(2) Making payments of principal and
interest and any other payments from
the amounts received from the borrower as may be required under the
terms of the loan.

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National Credit Union Administration

§ 760.5

Special flood hazard area means the
land in the flood plain within a community having at least a one percent
chance of flooding in any given year, as
designated by the Administrator of
FEMA.
Table funding means a settlement at
which a loan is funded by a contemporaneous advance of loan funds and an
assignment of the loan to the person
advancing the funds.

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§ 760.3 Requirement to purchase flood
insurance where available.
(a) In general. A credit union shall
not make, increase, extend, or renew
any designated loan unless the building
or mobile home and any personal property securing the loan is covered by
flood insurance for the term of the
loan. The amount of insurance must be
at least equal to the lesser of the outstanding principal balance of the designated loan or the maximum limit of
coverage available for the particular
type of property under the Act. Flood
insurance coverage under the Act is
limited to the building or mobile home
and any personal property that secures
a loan and not the land itself.
(b) Table funded loan. A credit union
that acquires a loan from a mortgage
broker or other entity through table
funding shall be considered to be making a loan for the purposes of this part.
§ 760.4 Exemptions.
The flood insurance requirement prescribed by § 760.3 does not apply with
respect to:
(a) Any State-owned property covered under a policy of self-insurance
satisfactory to the Administrator of
FEMA, who publishes and periodically
revises the list of States falling within
this exemption;
(b) Property securing any loan with
an original principal balance of $5,000
or less and a repayment term of one
year or less; or
(c) Any structure that is a part of
any residential property but is detached from the primary residential
structure of such property and does not
serve as a residence. For purposes of
this paragraph (c):
(1) ‘‘A structure that is a part of a
residential property’’ is a structure
used primarily for personal, family, or

household purposes, and not used primarily for agricultural, commercial,
industrial, or other business purposes;
(2) A structure is ‘‘detached’’ from
the primary residential structure if it
is not joined by any structural connection to that structure; and
(3) ‘‘Serve as a residence’’ shall be
based upon the good faith determination of the credit union that the structure is intended for use or actually
used as a residence, which generally includes sleeping, bathroom, or kitchen
facilities.
§ 760.5

Escrow requirement.

(a) In general—(1) Applicability. Except as provided in paragraphs (a)(2) or
(c) of this section, a credit union, or a
servicer acting on behalf of the credit
union, shall require the escrow of all
premiums and fees for any flood insurance required under § 760.3(a) for any
designated loan secured by residential
improved real estate or a mobile home
that is made, increased, extended, or
renewed on or after January 1, 2016,
payable with the same frequency as
payments on the designated loan are
required to be made for the duration of
the loan.
(2) Exceptions. Paragraph (a)(1) of this
section does not apply if:
(i) The loan is an extension of credit
primarily for business, commercial, or
agricultural purposes;
(ii) The loan is in a subordinate position to a senior lien secured by the
same residential improved real estate
or mobile home for which the borrower
has obtained flood insurance coverage
that meets the requirements of
§ 760.3(a);
(iii) Flood insurance coverage for the
residential improved real estate or mobile home is provided by a policy that:
(A) Meets the requirements of
§ 760.3(a);
(B) Is provided by a condominium association, cooperative, homeowners association, or other applicable group;
and
(C) The premium for which is paid by
the condominium association, cooperative, homeowners association, or other
applicable group as a common expense;
(iv) The loan is a home equity line of
credit;

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§ 760.5

12 CFR Ch. VII (1–1–18 Edition)

(v) The loan is a nonperforming loan,
which is a loan that is 90 or more days
past due and remains nonperforming
until it is permanently modified or
until the entire amount past due, including principal, accrued interest, and
penalty interest incurred as the result
of past due status, is collected or otherwise discharged in full; or
(vi) The loan has a term of not longer
than 12 months.
(3) Duration of exception. If a credit
union, or a servicer acting on behalf of
the credit union, determines at any
time during the term of a designated
loan secured by residential improved
real estate or a mobile home that is
made, increased, extended, or renewed
on or after January 1, 2016, that an exception under paragraph (a)(2) of this
section does not apply, then the credit
union or its servicer shall require the
escrow of all premiums and fees for any
flood insurance required under § 760.3(a)
as soon as reasonably practicable and,
if applicable, shall provide any disclosure required under section 10 of the
Real Estate Settlement Procedures Act
of 1974 (12 U.S.C. 2609) (RESPA).
(4) Escrow account. The credit union,
or a servicer acting on behalf of the
credit union, shall deposit the flood insurance premiums and fees on behalf of
the borrower in an escrow account.
This escrow account will be subject to
escrow requirements adopted pursuant
to section 10 of RESPA, which generally limits the amount that may be
maintained in escrow accounts for certain types of loans and requires escrow
account statements for those accounts,
only if the loan is otherwise subject to
RESPA. Following receipt of a notice
from the Administrator of FEMA or
other provider of flood insurance that
premiums are due, the credit union, or
a servicer acting on behalf of the credit
union, shall pay the amount owed to
the insurance provider from the escrow
account by the date when such premiums are due.
(b) Notice. For any loan for which a
credit union is required to escrow
under paragraph (a) or paragraph (c)(2)
of this section or may be required to
escrow under paragraph (a)(3) of this
section during the term of the loan, the
credit union, or a servicer acting on behalf of the credit union, shall mail or

deliver a written notice with the notice
provided under § 760.9 informing the
borrower that the credit union is required to escrow all premiums and fees
for required flood insurance, using language that is substantially similar to
model clauses on the escrow requirement in appendix A.
(c) Small lender exception—(1) Qualification. Except as may be required
under applicable State law, paragraphs
(a), (b) and (d) of this section do not
apply to a credit union:
(i) That has total assets of less than
$1 billion as of December 31 of either of
the two prior calendar years; and
(ii) On or before July 6, 2012:
(A) Was not required under Federal
or State law to deposit taxes, insurance premiums, fees, or any other
charges in an escrow account for the
entire term of any loan secured by residential improved real estate or a mobile home; and
(B) Did not have a policy of consistently and uniformly requiring the deposit of taxes, insurance premiums,
fees, or any other charges in an escrow
account for any loans secured by residential improved real estate or a mobile home.
(2) Change in status. If a credit union
previously qualified for the exception
in paragraph (c)(1) of this section, but
no longer qualifies for the exception
because it had assets of $1 billion or
more for two consecutive calendar year
ends, the credit union must escrow premiums and fees for flood insurance pursuant to paragraph (a) of this section
for any designated loan made, increased, extended, or renewed on or
after July 1 of the first calendar year
of changed status.
(d) Option to escrow—(1) In general. A
credit union, or a servicer acting on behalf of the credit union, shall offer and
make available to the borrower the option to escrow all premiums and fees
for any flood insurance required under
§ 760.3 for any loan secured by residential improved real estate or a mobile
home that is outstanding on January 1,
2016, or July 1 of the first calendar year
in which the credit union has had a
change in status pursuant to paragraph
(c)(2) of this section, unless:
(i) The credit union or the loan qualifies for an exception from the escrow

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National Credit Union Administration

§ 760.7

requirement under paragraphs (a)(2) or
(c) of this section, respectively;
(ii)
The
borrower
is
already
escrowing all premiums and fees for
flood insurance for the loan; or
(iii) The credit union is required to
escrow flood insurance premiums and
fees pursuant to paragraph (a) of this
section.
(2) Notice. For any loan subject to
paragraph (d) of this section, the credit
union, or a servicer acting on behalf of
the credit union, shall mail or deliver
to the borrower no later than June 30,
2016, or September 30 of the first calendar year in which the credit union
has had a change in status pursuant to
paragraph (c)(2) of this section, a notice in writing, or if the borrower
agrees, electronically, informing the
borrower of the option to escrow all
premiums and fees for any required
flood insurance and the method(s) by
which the borrower may request the escrow, using language similar to the
model clause in appendix B to this
part.
(3) Timing. The credit union or
servicer must begin escrowing premiums and fees for flood insurance as
soon as reasonably practicable after
the credit union or servicer receives
the borrower’s request to escrow.
[80 FR 43261, July 21, 2015]

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§ 760.6 Required use of standard flood
hazard determination form.
(a) Use of form. A credit union shall
use the standard flood hazard determination form developed by the Administrator of FEMA when determining whether the building or mobile
home offered as collateral security for
a loan is or will be located in a special
flood hazard area in which flood insurance is available under the Act. The
standard flood hazard determination
form may be used in a printed, computerized, or electronic manner. A credit
union may obtain the standard flood
hazard
determination
form
from
FEMA’s Web site at www.fema.gov.
(b) Retention of form. A credit union
shall retain a copy of the completed
standard flood hazard determination
form, in either hard copy or electronic
form, for the period of time the credit
union owns the loan.

§ 760.7 Force placement of flood insurance.
(a) Notice and purchase of coverage. If
a credit union, or a servicer acting on
behalf of the credit union, determines
at any time during the term of a designated loan, that the building or mobile home and any personal property
securing the designated loan is not covered by flood insurance or is covered by
flood insurance in an amount less than
the amount required under § 760.3, then
the credit union or its servicer shall
notify the borrower that the borrower
should obtain flood insurance, at the
borrower’s expense, in an amount at
least equal to the amount required
under § 760.3, for the remaining term of
the loan. If the borrower fails to obtain
flood insurance within 45 days after notification, then the credit union or its
servicer shall purchase insurance on
the borrower’s behalf. The credit union
or its servicer may charge the borrower
for the cost of premiums and fees incurred in purchasing the insurance, including premiums or fees incurred for
coverage beginning on the date on
which flood insurance coverage lapsed
or did not provide a sufficient coverage
amount.
(b) Termination of force-placed insurance—(1) Termination and refund. Within 30 days of receipt by a credit union,
or a servicer acting on behalf of the
credit union, of a confirmation of a
borrower’s existing flood insurance
coverage, the credit union or its
servicer shall:
(i) Notify the insurance provider to
terminate any insurance purchased by
the credit union or its servicer under
paragraph (a) of this section; and
(ii) Refund to the borrower all premiums paid by the borrower for any insurance purchased by the credit union
or its servicer under paragraph (a) of
this section during any period during
which the borrower’s flood insurance
coverage and the insurance coverage
purchased by the credit union or its
servicer were each in effect, and any
related fees charged to the borrower
with respect to the insurance purchased by the credit union or its
servicer during such period.
(2) Sufficiency of demonstration. For
purposes of confirming a borrower’s existing flood insurance coverage under

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§ 760.8

12 CFR Ch. VII (1–1–18 Edition)

paragraph (b) of this section, a credit
union or its servicer shall accept from
the borrower an insurance policy declarations page that includes the existing flood insurance policy number and
the identity of, and contact information for, the insurance company or
agent.

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§ 760.8

Determination fees.

(a) General. Notwithstanding any
Federal or State law other than the
Flood Disaster Protection Act of 1973,
as amended (42 U.S.C. 4001–4129), any
credit union, or a servicer acting on behalf of the credit union, may charge a
reasonable fee for determining whether
the building or mobile home securing
the loan is located or will be located in
a special flood hazard area. A determination fee may also include, but is
not limited to, a fee for life-of-loan
monitoring.
(b) Borrower fee. The determination
fee authorized by paragraph (a) of this
section may be charged to the borrower
if the determination:
(1) Is made in connection with a making, increasing, extending, or renewing
of the loan that is initiated by the borrower;
(2) Reflects the Administrator of
FEMA’s revision or updating of floodplain areas or flood-risk zones;
(3) Reflects the Administrator of
FEMA’s publication of a notice or compendium that:
(i) Affects the area in which the
building or mobile home securing the
loan is located; or
(ii) By determination of the Administrator of FEMA, may reasonably require a determination whether the
building or mobile home securing the
loan is located in a special flood hazard
area; or
(4) Results in the purchase of flood
insurance coverage by the credit union
or its servicer on behalf of the borrower under § 760.7.
(c) Purchaser or transferee fee. The determination fee authorized by paragraph (a) of this section may be
charged to the purchaser or transferee
of a loan in the case of the sale or
transfer of the loan.

§ 760.9 Notice of special flood hazards
and availability of Federal disaster
relief assistance.
(a) Notice requirement. When a credit
union makes, increases, extends, or renews a loan secured by a building or a
mobile home located or to be located in
a special flood hazard area, the credit
union shall mail or deliver a written
notice to the borrower and to the
servicer in all cases whether or not
flood insurance is available under the
Act for the collateral securing the
loan.
(b) Contents of notice. The written notice must include the following information:
(1) A warning, in a form approved by
the Administrator of FEMA, that the
building or the mobile home is or will
be located in a special flood hazard
area;
(2) A description of the flood insurance purchase requirements set forth
in section 102(b) of the Flood Disaster
Protection Act of 1973, as amended (42
U.S.C. 4012a(b));
(3) A statement, where applicable,
that flood insurance coverage is available from private insurance companies
that issue standard flood insurance
policies on behalf of the NFIP or directly from the NFIP;
(4) A statement that flood insurance
that provides the same level of coverage as a standard flood insurance policy under the NFIP may also be available from a private insurance company
that issues policies on behalf of the
company;
(5) A statement that the borrower is
encouraged to compare the flood insurance coverage, deductibles, exclusions,
conditions, and premiums associated
with flood insurance policies issued on
behalf of the NFIP and policies issued
on behalf of private insurance companies and that the borrower should direct inquiries regarding the availability, cost, and comparisons of flood
insurance coverage to an insurance
agent; and
(6) A statement whether Federal disaster relief assistance may be available
in the event of damage to the building
or mobile home caused by flooding in a
Federally declared disaster.
(c) Timing of notice. The credit union
shall provide the notice required by

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National Credit Union Administration

Pt. 760, App. A

paragraph (a) of this section to the borrower within a reasonable time before
the completion of the transaction, and
to the servicer as promptly as practicable after the credit union provides
notice to the borrower and in any
event no later than the time the credit
union provides other similar notices to
the servicer concerning hazard insurance and taxes. Notice to the servicer
may be made electronically or may
take the form of a copy of the notice to
the borrower.
(d) Record of receipt. The credit union
shall retain a record of the receipt of
the notices by the borrower and the
servicer for the period of time the credit union owns the loan.
(e) Alternate method of notice. Instead
of providing the notice to the borrower
required by paragraph (a) of this section, a credit union may obtain satisfactory written assurance from a seller
or lessor that, within a reasonable time
before the completion of the sale or
lease transaction, the seller or lessor
has provided such notice to the purchaser or lessee. The credit union shall
retain a record of the written assurance from the seller or lessor for the
period of time the credit union owns
the loan.
(f) Use of sample form of notice. A credit union will be considered to be in
compliance with the requirement for
notice to the borrower of this section
by providing written notice to the borrower containing the language presented in appendix A to this part within a reasonable time before the completion of the transaction. The notice presented in appendix A to this part satisfies the borrower notice requirements
of the Act.

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[80 FR 43259, July 21, 2015, as amended at 80
FR 43262, July 21, 2015]

§ 760.10 Notice of servicer’s identity.
(a) Notice requirement. When a credit
union makes, increases, extends, renews, sells, or transfers a loan secured
by a building or mobile home located
or to be located in a special flood hazard area, the credit union shall notify
the Administrator of FEMA (or the Administrator of FEMA’s designee) in
writing of the identity of the servicer
of the loan. The Administrator of
FEMA has designated the insurance

provider to receive the credit union’s
notice of the servicer’s identity. This
notice may be provided electronically
if electronic transmission is satisfactory to the Administrator of FEMA’s
designee.
(b) Transfer of servicing rights. The
credit union shall notify the Administrator of FEMA (or the Administrator
of FEMA’s designee) of any change in
the servicer of a loan described in paragraph (a) of this section within 60 days
after the effective date of the change.
This notice may be provided electronically if electronic transmission is satisfactory to the Administrator or his
or her designee. Upon any change in
the servicing of a loan described in
paragraph (a) of this section, the duty
to provide notice under this paragraph
(b) shall transfer to the transferee
servicer.
APPENDIX A TO PART 760—SAMPLE FORM
OF NOTICE OF SPECIAL FLOOD HAZARDS AND AVAILABILITY OF FEDERAL
DISASTER RELIEF ASSISTANCE
We are giving you this notice to inform
you that:
The building or mobile home securing the
loan for which you have applied is or will be
located in an area with special flood hazards.
The area has been identified by the Administrator of the Federal Emergency Management Agency (FEMA) as a special flood hazard area using FEMA’s Flood Insurance Rate
Map or the Flood Hazard Boundary Map for
the following community: lll. This area
has a one percent (1%) chance of a flood
equal to or exceeding the base flood elevation (a 100-year flood) in any given year.
During the life of a 30-year mortgage loan,
the risk of a 100-year flood in a special flood
hazard area is 26 percent (26%).
Federal law allows a lender and borrower
jointly to request the Administrator of
FEMA to review the determination of whether the property securing the loan is located
in a special flood hazard area. If you would
like to make such a request, please contact
us for further information.
llThe community in which the property
securing the loan is located participates in
the National Flood Insurance Program
(NFIP). Federal law will not allow us to
make you the loan that you have applied for
if you do not purchase flood insurance. The
flood insurance must be maintained for the
life of the loan. If you fail to purchase or
renew flood insurance on the property, Federal law authorizes and requires us to purchase the flood insurance for you at your expense.

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Pt. 760, App. B

12 CFR Ch. VII (1–1–18 Edition)

• At a minimum, flood insurance purchased must cover the lesser of:
(1) The outstanding principal balance of
the loan; or
(2) the maximum amount of coverage allowed for the type of property under the
NFIP.
Flood insurance coverage under the NFIP
is limited to the building or mobile home
and any personal property that secures your
loan and not the land itself.
• Federal disaster relief assistance (usually in the form of a low-interest loan) may
be available for damages incurred in excess
of your flood insurance if your community’s
participation in the NFIP is in accordance
with NFIP requirements.
• Although you may not be required to
maintain flood insurance on all structures,
you may still wish to do so, and your mortgage lender may still require you to do so to
protect the collateral securing the mortgage.
If you choose not to maintain flood insurance on a structure and it floods, you are responsible for all flood losses relating to that
structure.
Availability of Private Flood Insurance
Coverage
Flood insurance coverage under the NFIP
may be purchased through an insurance
agent who will obtain the policy either directly through the NFIP or through an insurance company that participates in the
NFIP. Flood insurance that provides the
same level of coverage as a standard flood insurance policy under the NFIP may be available from private insurers that do not participate in the NFIP. You should compare
the flood insurance coverage, deductibles,
exclusions, conditions, and premiums associated with flood insurance policies issued on
behalf of the NFIP and policies issued on behalf of private insurance companies and contact an insurance agent as to the availability, cost, and comparisons of flood insurance coverage.

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[Escrow Requirement for Residential Loans
Federal law may require a lender or its
servicer to escrow all premiums and fees for
flood insurance that covers any residential
building or mobile home securing a loan that
is located in an area with special flood hazards. If your lender notifies you that an escrow account is required for your loan, then
you must pay your flood insurance premiums
and fees to the lender or its servicer with the
same frequency as you make loan payments
for the duration of your loan. These premiums and fees will be deposited in the escrow account, which will be used to pay the
flood insurance provider.]
llFlood insurance coverage under the
NFIP is not available for the property securing the loan because the community in

which the property is located does not participate in the NFIP. In addition, if the nonparticipating community has been identified
for at least one year as containing a special
flood hazard area, properties located in the
community will not be eligible for Federal
disaster relief assistance in the event of a
Federally declared flood disaster.
[80 FR 43262, July 21, 2015]

APPENDIX B TO PART 760—SAMPLE
CLAUSE FOR OPTION TO ESCROW FOR
OUTSTANDING LOANS
Escrow Option Clause
You have the option to escrow all premiums and fees for the payment on your
flood insurance policy that covers any residential building or mobile home that is located in an area with special flood hazards
and that secures your loan. If you choose
this option:
• Your payments will be deposited in an escrow account to be paid to the flood insurance provider.
• The escrow amount for flood insurance
will be added to the regular mortgage payment that you make to your lender or its
servicer.
• The payments you make into the escrow
account will accumulate over time and the
funds will be used to pay your flood insurance policy when your lender or servicer receives a notice from your flood insurance
provider that the flood insurance premium is
due.
To choose this option, follow the instructions below. If you have any questions about
the option, contact [Insert Name of Lender
or Servicer] at [Insert Contact Information].
[Insert Instructions for Selecting to Escrow]
[80 FR 43263, July 21, 2015]

PART 761—REGISTRATION OF RESIDENTIAL
MORTGAGE
LOAN
ORIGINATORS
AUTHORITY: 12 U.S.C. 1751 et seq. and 5101 et
seq.
SOURCE: 78 FR 32545, May 31, 2013, unless
otherwise noted.

§ 761.1

Cross reference.

The rules formerly at 12 CFR part 761
have been republished by the Consumer
Financial Protection Bureau at 12 CFR
part 1007, ‘‘S.A.F.E. Mortgage Licensing Act—Federal Registration of Residential Mortgage Loan Originators
(Regulation G)’’.

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