FLOOD DISASTER PROTECTION ACT Flashcards
When a dwelling is located in a flood hazard area in a community participating in the National Flood Insurance Program, what is the requirement for the length of time flood insurance is required for the loan?
Flood insurance is required for the life of the loan.
When do the mandatory flood insurance purchase requirements apply to loans for structures located in flood hazard zones?
When the structure is located in a community participating in the National Flood Insurance Program (NFIP).
Briefly describe the Write Your Own (WYO) Program.
Allows participating property and casualty insurance companies to write and service the NFIP’s Standard Flood Insurance Policy in their own names.
If a credit union sells a mortgage loan along with the servicing rights to that loan, does the credit union retain any of the flood insurance responsibilities?
No, the credit union’s duties cease upon the sale of the loan.
The credit union may not use a previous flood determination when making a new loan. However, if the loan involves the increase, extension, renewal or purchase of an existing loan, a previous flood determination can be reused if three conditions are met. List those three conditions.
The determination is less than seven years old; no new or revised flood insurance rate map or flood hazard boundary map has been issued in the interim; and it was initially recorded on the revised standard flood hazard determination form.
Credit unions are allowed to charge a “reasonable fee” for flood determinations. When must the credit union disclose the fee to the borrower?
On the Loan Estimate and Closing Disclosure.
When a credit union makes, increases, extends, or renews a loan secured by a structure in or to be located in a flood hazard area, a special notice must be mailed or delivered to the loan applicant. What are the disclosures that must be included in this notice?
A warning that the structure is or will be in a flood hazard zone; a description of the Flood Disaster Protection Act flood insurance purchase requirements; a statement that flood insurance is available under the NFIP and from private insurers, if applicable; and whether disaster relief assistance may be available if a flood situation is declared a federal disaster.
Compliance with flood insurance requirements is mandatory when selling loans on the secondary market and when purchasing loans from mortgage brokers through table funding.
True OR False
True.
If the property a member is using to secure a loan is located in a special flood hazard area, what is the amount of insurance required for that property?
The amount of insurance must be equal to the lesser of the outstanding principal balance of the loan or the maximum limit of coverage available for that particular type of property.
If it is determined at some point in the life of a loan that the amount of flood insurance is not adequate, what is the credit union required to do before force
placing insurance on that loan?
The member must be notified that the amount of insurance is inadequate and that additional insurance must be purchased at the member’s expense.
