Lenders making, increasing, extending or renewing loans secured by improved real property in a special flood hazard area must require flood insurance.

Determination. Using the standard determination form, with the basis documented and retained for the life of the loan. Life-of-loan monitoring for map changes is standard and generally provided by a vendor.

Amount required. The lesser of the outstanding principal, the insurable value of the improvements, or the maximum available under the national program. Insurable value is a recurring source of examination findings, since using replacement cost rather than an appropriate measure can over-insure and using the loan balance alone can under-insure.

Notice to borrower of the hazard designation and of the availability of disaster assistance, provided within a reasonable time before closing with proof of receipt.

Escrow required for most residential loans, with exceptions for small lenders meeting stated criteria.

Force placement. Notice on discovering inadequate coverage, and purchase on the borrower’s behalf if coverage is not obtained within forty-five days, with premiums charged from the date of lapse.

Private flood insurance must be accepted where it meets the definitional criteria, with a compliance aid statement simplifying the assessment.

Penalties are assessed per violation and per year, without regard to whether any loss occurred.