As the National Flood Insurance Program (NFIP) experiences a lapse due to the ongoing government shutdown, federal banking agencies have reissued guidance reminding lenders of their flood insurance obligations.

Lenders may continue to make loans subject to the federal flood insurance statutes, even when the NFIP is not available, without requiring federal flood insurance. Make sure to consider the following:

• Lenders must continue to conduct flood hazard determinations.
• Borrower notices must remain timely, complete, and accurate.
• Institutions should maintain prudent risk management practices. If your financial institution decides to make loans without requiring flood insurance during this time, make sure that as soon as the NFIP is reauthorized, force placement procedures are implemented.

There are no changes from prior shutdown guidance. CCI encourages you to review the complete interagency statement here.

If you have questions or need support navigating this period, our compliance team is here to help. You can reach us at inquiries@completecompli.com.

 

Sarah Smith, CRCM, CAFP