Planning and Community Development Department

Mandatory Purchase of Flood Insurance

The Mandatory Purchase of Flood Insurance Guidelines booklet provides guidance to the federally regulated lending industry for implementing the mandatory purchase provisions of the National Flood Insurance Reform Act of 1994 and other key legislation that governs the National Flood Insurance Program (NFIP). The mandatory purchase law directed the Federal agency lender regulators and Government-Sponsored Enterprises (GSEs) to develop and adopt regulations requiring lenders subject to their jurisdiction not to make, increase, renew, or extend any loan on applicable property unless flood insurance is purchased and maintained
to protect that property securing loans in high flood risk areas.

Implementation of the mandatory flood insurance purchase requirements as explained in these guidelines is the responsibility of the various Federal agencies that oversee lenders. Each Federal lending regulator and GSE has the responsibility to issue its own regulations to implement the statutory requirements.

The authority of FEMA is limited to administering the NFIP, which enables property owners in participating communities to purchase federally backed flood insurance. FEMA does not have statutory responsibility for enforcing the mandate to purchase flood insurance.

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