Recordkeeping and Disclosure Requirements Associated with Loans Secured by Real Estate Located in Flood Hazard Areas Pursuant to Section 208.25 of Regulation H

In general, the federal flood insurance statutes and Regulation H - Membership of State Banking Institutions in the Federal Reserve System (12 CFR 208) provide that a lender shall not make, increase, extend, or renew a loan secured by a building or mobile home located in a special flood hazard area unless the secured property is covered by flood insurance for the term of the loan. With respect to the recordkeeping and disclosure provisions, the regulation requires state member banks to: • retain a completed copy of the Standard Flood Hazard Determination Form developed by the Federal Emergency Management Agency (standard FEMA form). The form is used by lenders to document their determination of whether improved property securing a loan is in a special flood hazard area, • notify a borrower and servicer when loans secured by improved property are determined to be in a special flood hazard area and retain a record of receipt of the notice, • notify a borrower of a loan secured by residential improved property or a mobile home that the state member bank is required to escrow all premiums and fees for required flood insurance when the bank makes, increases, extends, or renews the loan. For loans secured by residential improved property or a mobile home that were outstanding on January 1, 2016, or July 1 of the first year in which the bank loses its exception from the escrow requirement, the state member bank must mail or deliver information on the option to escrow flood premiums and fees, • notify a borrower of the borrower’s obligation to obtain flood insurance if the lender determines at any time during the term of the loan that the improved property securing the loan is not covered by adequate flood insurance. If the borrower fails to obtain the flood insurance within 45 days of this notification, the state member bank or its servicer must purchase insurance and may charge the borrower for the cost of the premiums. If the state member bank receives confirmation of a borrower’s existing flood insurance coverage after it has force placed insurance on behalf of the borrower, the bank or its servicer shall notify the insurance provider to terminate any insurance purchased by the bank or its servicer, and • notify the Federal Emergency Management Agency (FEMA) of the identity of, and any change in, the servicer of a loan secured by improved property in a special flood hazard area. The information collection requirements under the flood hazard provisions of Regulation H are triggered by specific events in the lending process.

The latest form for Recordkeeping and Disclosure Requirements Associated with Loans Secured by Real Estate Located in Flood Hazard Areas Pursuant to Section 208.25 of Regulation H expires 2022-06-30 and can be found here.

Recordkeeping Sections 208.25(c)(3)(iii) and (iv) Private flood insurance

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