Regulation H requires state member banks to notify a borrower and servicer (person responsible for receiving scheduled payments from a borrower or making payments of principal and interest and other payments from the amounts received from the borrower) when a loan is secured by real estate that is determined to be in a designated flood hazard area. For such loans, the state member bank must then notify the borrower and servicer whether flood insurance is available. The state member bank must also notify the Federal Emergency Management Agency (FEMA) of the identity of, and any change of, the servicer of the loan. Last, the bank must retain a copy of the Standard Flood Hazard Determination Form used to determine whether the property securing a loan is in a designated flood hazard area.
Purpose: The FEMA form is used to determine whether the property securing a loan is located in a designated flood hazard area. Also, the form is used to document the factors considered as to whether flood insurance is required and available.
Section 208.25 of Regulation H implements provisions of the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as amended by the National Flood Insurance Reform Act of 1994. The Reform Act comprehensively revised the federal flood insurance statutes, with the intention of increasing compliance with flood insurance requirements and increasing participation in the National Flood Insurance Program. The revisions were designed to provide additional income to the National Flood Insurance Fund and to decrease the financial burden of flooding on the federal government, taxpayers, and flood victims.
State member banks. The recordkeeping and disclosure requirements are mandatory.