42 U.S.C. §4012a — Flood insurance purchase and compliance requirements and escrow accounts
42 U.S.C. §4012a imposes the federal mandatory-purchase requirement for flood insurance on loans secured by improved real estate or mobile homes in Special Flood Hazard Areas (SFHAs).
Verbatim regulatory text
Verbatim provisions from 42 U.S.C. §4012a — Flood insurance purchase and compliance requirements and escrow accounts — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
42 U.S.C. §4012a(b)(1) — Mandatory purchase: regulated lending institutions
not to make, increase, extend, or renew any loan secured by improved real estate or a mobile home located or to be located in an area that has been identified by the Administrator as an area having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act of 1968 [ 42 U.S.C. 4001 et seq.], unless the building or mobile home and any personal property securing such loan is covered for the term of the loan by flood insurance in an amount at least equal to the outstanding principal balance of the loan or the maximum limit of coverage made available under the Act with respect to the particular type of property, whichever is less; and
42 U.S.C. §4012a(b)(6) — Notice of flood insurance availability
(A) In general Each lender shall disclose to a borrower that is subject to this subsection that—
42 U.S.C. §4012a(e)(1) — Borrower notice of lack of flood coverage
the lender or servicer shall notify the borrower under the loan that the borrower should obtain, at the borrower’s expense, an amount of flood insurance for the building or mobile home and such personal property that is not less than the amount under subsection (b)(1), for the term of the loan.
42 U.S.C. §4012a(e)(2) — Force-placement after 45 days
If the borrower fails to purchase such flood insurance within 45 days after notification under paragraph (1), the lender or servicer for the loan shall purchase the insurance on behalf of the borrower and may charge the borrower for the cost of premiums and fees incurred by the lender or servicer for the loan 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.
42 U.S.C. §4012a(e)(3) — Termination of force-placed insurance
Within 30 days of receipt by the lender or servicer of a confirmation of a borrower’s existing flood insurance coverage, the lender or servicer shall—
42 U.S.C. §4012a(b)(6) — Notice of flood insurance availability — enumerated items (chapeau recall fix)
(i) flood insurance is available from private insurance companies that issue standard flood insurance policies on behalf of the national flood insurance program or directly from the national flood insurance program ; (ii) flood insurance that provides the same level of coverage as a standard flood insurance policy under the national flood insurance program may be available from a private insurance company that issues policies on behalf of the company; and (iii) 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 national flood insurance program and policies issued on behalf of private insurance companies and to direct inquiries regarding the availability, cost, and comparisons of flood insurance coverage to an insurance agent. (B) Rule of construction Nothing in this paragraph shall be construed as affecting or otherwise limiting the authority of a Federal entity for lending regulation to approve any disclosure made by a regulated lending institution for purposes of complying with subparagraph (A).