11/14/2013 ENVIRONMENTAL OVERSIGHT COMMITTEE Minutes

Home Browse Search

Federal Emergency Management Agency Washington,D.C.20472 The National Flood Insurance Program (NFIP) and Your Property Background information Escalating costs to taxpayers for flood disaster relief led Congress to establish the NFIP in 1968. The NFIP is administered by the Federal Emergency Management Agency(FEMA)and is based on the agreement that if a community will implement safe floodplain management practices, the federal government will make flood insurance available. FEMA has undertaken flood hazard identification and mapping efforts to identify flood hazard areas,including the area that has a one percent chance of flooding in any given year. This area is referred to as the Special Flood Hazard Area (SFHA). Development may take place within the SFHA provided that it complies with local floodplain ordinances and federal requirements. Flood insurance is required for insurable structures within the SFHA as a condition of receipt of federal or federally related financing. When is flood insurance required? The National Flood Insurance Act of 1968,as amended by the Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994,mandates the purchase of flood insurance as a condition of any loan secured by improved real estate or manufactured housing in an SFHA, when the loan is provided by a federally regulated lending institution,federal agency lender,or Government-Sponsored Enterprises for Housing, (Freddie Mae/Fannie Mae). The purchase of flood insurance is also required as a condition of receipt of federal or federally related financial assistance resulting from a federally declared flooding disaster. The purchase of flood insurance on a voluntary basis is frequently prudent even outside of SFHAs. Flood insurance premiums for buildings located outside of the SFHA arc generally lower than for those located within the SFHA. Why am I required to purchase flood Insurance now when I never have been before? Floods over recent years have contributed to a heightened level of interest in flood insurance compliance on the part of federal regulators for lending institutions,particularly as the aftermath of many floods has revealed that a large percentage of flood disaster victims are unprotected by flood insurance. In addition,the National Flood Insurance Reform Act of 1994 instituted tighter measures to ensure lender compliance. Lenders are responsible for requiring and maintaining flood insurance for buildings or manufactured homes located in SFHAs during the term of the loan. Upon becoming aware of non-compliant mortgages,lenders are requiring borrowers to purchase flood insurance. Borrowers who have reason to dispute the flood hazard determination presented by the lender may request jointly with the lender that FEMA review the determination. The procedure is described below. How can I determine if a property is in an SFHA? Flood insurance maps that identify SFHAs within a community are usually on file in a local repository in the community such as the town hall or the county building. You may consult these maps to determine if a property is in an SFHA. You may also order maps by contacting the FEMA Map Service Center at(800)359-9616. Delivery is usually within two to four weeks. What can I do if I believe the lender's flood hazard determination is incorrect? If a lender determines that a mortgaged structure is located in an SFHA on the NFIP map,and the borrower disputes the lender's determination, FEMA will,at the joint request of the borrower and the lender,review the finding presented by the lender. The request,signed by the borrower and lender,must be postmarked no later than 45 days following the date the lender notified the borrower that the property is in an SFHA. A fee of$80 must be submitted with the request. After reviewing all of the necessary information,FEMA will provide a Letter of Determination Review (LODR),which either overturns the lender's finding,upholds it,or leaves it unchanged because insufficient information was provided. Although a LODR may overturn the lender's finding,it is still the lender's prerogative to require flood insurance as a condition of receiving financial assistance. A LODR considers only the horizontal location of the structure relative to the SFHA shown on the NFIP map. It does not consider the elevation of the structure relative to the Base(one percent annual chance)Flood Elevation(BFE). The attached"How to Request a Flood Hazard Determination Review from FEMA"form further explains the process and what documents must accompany the request.