53962 Federal Register / Vol. 60, No. 201 / Wednesday, October 18, 1995 / Proposed Rules
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 22
[Docket No. 95–24]
RIN 1557–AB47
FEDERAL RESERVE SYSTEM
12 CFR Part 208
[Regulation H, Docket No. R–0897]
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 339
RIN 3064–AB66
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Parts 563 and 572
[No. 95–179]
RIN 1550–AA82
FARM CREDIT ADMINISTRATION
12 CFR Part 614
RIN 3052–AB57
NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Part 760
Loans in Areas Having Special Flood
Hazards
AGENCIES: Office of the Comptroller of
the Currency, Treasury; Board of
Governors of the Federal Reserve
System; Federal Deposit Insurance
Corporation; Office of Thrift
Supervision, Treasury; Farm Credit
Administration; National Credit Union
Administration.
ACTION: Joint notice of proposed
rulemaking.
SUMMARY: The Comptroller of the
Currency (OCC), Board of Governors of
the Federal Reserve System (Board),
Federal Deposit Insurance Corporation
(FDIC), Office of Thrift Supervision
(OTS), and National Credit Union
Administration (NCUA) are proposing
to amend their regulations, and the
Farm Credit Administration (FCA) is
proposing to issue new regulations,
regarding loans in areas having special
flood hazards. This action is required by
statute and is intended to implement the
provisions of the National Flood
Insurance Reform Act of 1994. Among
other statutorily mandated provisions,
the proposal would establish new
escrow requirements for flood insurance
premiums, explicit authority and the
requirement for lenders and servicers to
‘‘force-place’’ flood insurance under
certain circumstances, enhanced flood
hazard notice requirements, and new
authority for lenders to charge fees for
determining if a property is located in
a special flood hazard area.
DATES: Comments must be received by
December 18, 1995.
ADDRESSES: Comments should be
directed to:
OCC: Communications Division,
Office of the Comptroller of the
Currency, 250 E Street, SW.,
Washington, DC 20219, Attention:
Docket No. 95–24. Comments may be
inspected and photocopied at the same
location. In addition, comments may be
sent by facsimile transmission to FAX
number 202/874–5274 or by electronic
mail to
REG.COMMENTS@OCC.TREAS.GOV.
Board: William W. Wiles, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
DC 20551, Attention: Docket No. R–
0897, or delivered to room B–2222,
Eccles Building, between 8:45 a.m. and
5:15 p.m. Comments may be inspected
in Room MP–500 between 9:00 a.m. and
5:00 p.m. weekdays, except as provided
in § 261.8 of the Board of Governors’
rules regarding availability of
information, 12 CFR 261.8.
FDIC: Jerry L. Langley, Executive
Secretary, Attention: Room F–402,
Federal Deposit Insurance Corporation,
550 17th Street NW., Washington, DC
20429. Comments may be delivered to
Room F–400, 1776 F Street, NW.,
Washington, DC 20429, on business
days between 8:30 a.m. and 5:00 p.m. or
sent by facsimile transmission to FAX
number 202/898–3838. Internet:
COMMENTS@FDIC.GOV. Comments
will be available for inspection and
photocopying in room 7118, 550 17th
Street, NW., Washington, DC 20429,
between 8:30 a.m. and 5:00 p.m. on
business days.
OTS: Chief, Dissemination Branch,
Records Management and Information
Policy, Office of Thrift Supervision,
1700 G Street NW., Washington, DC
20552, Attention: Docket No. 95–179.
These submissions may be hand
delivered to 1700 G Street, NW., from
9:00 a.m. to 5:00 p.m. on business days
or may be sent by facsimile transmission
to FAX number (202/906–7755).
Comments will be available for
inspection at 1700 G Street NW., from
1:00 p.m. until 4:00 p.m., on business
days.
FCA: Patricia W. DiMuzio, Associate
Director, Regulation Development,
Office of Examination, Farm Credit
Administration, 1501 Farm Credit Drive,
McLean, VA 22102–5090. Copies of all
comments will be available for
examination by interested parties in
Regulation Development, Office of
Examination, Farm Credit
Administration.
NCUA: Becky Baker, Secretary of the
Board, National Credit Union
Administration, 1775 Duke Street,
Alexandria, VA 22314–3428. Comments
will be available for inspection at the
same location. Send comments to Ms.
Baker via the bulletin board by dialing
703/518–6480. Send one copy by U.S.
mail or fax to FAX number 703/518–
6319.
FOR FURTHER INFORMATION CONTACT:
OCC: Carol Workman, Compliance
Specialist (202/874–4858), Compliance
Management; Margaret Hesse, Attorney,
Community and Consumer Law
Division (202/874–5750), Jacqueline
Lussier, Senior Attorney, or Saumya
Bhavsar, Attorney, Legislative and
Regulatory Activities Division (202/
874–5090), Office of Chief Counsel.
Board: Diane Jackins, Senior Review
Examiner, Jennifer Lowe, Review
Examiner (202/452–3946), Division of
Consumer and Community Affairs;
Lawranne Stewart, Senior Attorney
(202/452–3513), or Rick Heyke,
Attorney (202/452–3688), Legal
Division. For the hearing impaired only,
Telecommunication Device for the Deaf
(TDD), Earnestine Hill or Dorothea
Thompson (202/452–3544).
FDIC: Mark Mellon, Senior Attorney,
Regulation and Legislation Section (202/
898–3854), Legal Division, or Ken
Baebel, Senior Review Examiner (202/
942–3086), or Barbara L. Boehm,
Consumer Affairs Specialist (202/942–
3631), Division of Compliance and
Consumer Affairs.
OTS: Larry Clark, Program Manager,
Compliance and Trust, Compliance
Policy (202/906–5628); Catherine
Shepard, Senior Attorney, Regulations
and Legislation Division (202/906–
7275), Office of Chief Counsel.
FCA: Robert G. Magnuson, Policy
Analyst, Regulation Development (703/
883–4498), Office of Examination; or
William L. Larsen, Senior Attorney,
Regulatory Operations Division (703/
883–4020), Office of General Counsel.
For the hearing impaired only, TDD
(703/883–4444).
NCUA: Kimberly Iverson, Program
Officer (703/518–6375), Office of
Examination and Insurance; or Jeffrey
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 22
[Docket No. 95–24]
RIN 1557–AB47
FEDERAL RESERVE SYSTEM
12 CFR Part 208
[Regulation H, Docket No. R–0897]
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 339
RIN 3064–AB66
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Parts 563 and 572
[No. 95–179]
RIN 1550–AA82
FARM CREDIT ADMINISTRATION
12 CFR Part 614
RIN 3052–AB57
NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Part 760
Loans in Areas Having Special Flood
Hazards
AGENCIES: Office of the Comptroller of
the Currency, Treasury; Board of
Governors of the Federal Reserve
System; Federal Deposit Insurance
Corporation; Office of Thrift
Supervision, Treasury; Farm Credit
Administration; National Credit Union
Administration.
ACTION: Joint notice of proposed
rulemaking.
SUMMARY: The Comptroller of the
Currency (OCC), Board of Governors of
the Federal Reserve System (Board),
Federal Deposit Insurance Corporation
(FDIC), Office of Thrift Supervision
(OTS), and National Credit Union
Administration (NCUA) are proposing
to amend their regulations, and the
Farm Credit Administration (FCA) is
proposing to issue new regulations,
regarding loans in areas having special
flood hazards. This action is required by
statute and is intended to implement the
provisions of the National Flood
Insurance Reform Act of 1994. Among
other statutorily mandated provisions,
the proposal would establish new
escrow requirements for flood insurance
premiums, explicit authority and the
requirement for lenders and servicers to
‘‘force-place’’ flood insurance under
certain circumstances, enhanced flood
hazard notice requirements, and new
authority for lenders to charge fees for
determining if a property is located in
a special flood hazard area.
DATES: Comments must be received by
December 18, 1995.
ADDRESSES: Comments should be
directed to:
OCC: Communications Division,
Office of the Comptroller of the
Currency, 250 E Street, SW.,
Washington, DC 20219, Attention:
Docket No. 95–24. Comments may be
inspected and photocopied at the same
location. In addition, comments may be
sent by facsimile transmission to FAX
number 202/874–5274 or by electronic
mail to
REG.COMMENTS@OCC.TREAS.GOV.
Board: William W. Wiles, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
DC 20551, Attention: Docket No. R–
0897, or delivered to room B–2222,
Eccles Building, between 8:45 a.m. and
5:15 p.m. Comments may be inspected
in Room MP–500 between 9:00 a.m. and
5:00 p.m. weekdays, except as provided
in § 261.8 of the Board of Governors’
rules regarding availability of
information, 12 CFR 261.8.
FDIC: Jerry L. Langley, Executive
Secretary, Attention: Room F–402,
Federal Deposit Insurance Corporation,
550 17th Street NW., Washington, DC
20429. Comments may be delivered to
Room F–400, 1776 F Street, NW.,
Washington, DC 20429, on business
days between 8:30 a.m. and 5:00 p.m. or
sent by facsimile transmission to FAX
number 202/898–3838. Internet:
COMMENTS@FDIC.GOV. Comments
will be available for inspection and
photocopying in room 7118, 550 17th
Street, NW., Washington, DC 20429,
between 8:30 a.m. and 5:00 p.m. on
business days.
OTS: Chief, Dissemination Branch,
Records Management and Information
Policy, Office of Thrift Supervision,
1700 G Street NW., Washington, DC
20552, Attention: Docket No. 95–179.
These submissions may be hand
delivered to 1700 G Street, NW., from
9:00 a.m. to 5:00 p.m. on business days
or may be sent by facsimile transmission
to FAX number (202/906–7755).
Comments will be available for
inspection at 1700 G Street NW., from
1:00 p.m. until 4:00 p.m., on business
days.
FCA: Patricia W. DiMuzio, Associate
Director, Regulation Development,
Office of Examination, Farm Credit
Administration, 1501 Farm Credit Drive,
McLean, VA 22102–5090. Copies of all
comments will be available for
examination by interested parties in
Regulation Development, Office of
Examination, Farm Credit
Administration.
NCUA: Becky Baker, Secretary of the
Board, National Credit Union
Administration, 1775 Duke Street,
Alexandria, VA 22314–3428. Comments
will be available for inspection at the
same location. Send comments to Ms.
Baker via the bulletin board by dialing
703/518–6480. Send one copy by U.S.
mail or fax to FAX number 703/518–
6319.
FOR FURTHER INFORMATION CONTACT:
OCC: Carol Workman, Compliance
Specialist (202/874–4858), Compliance
Management; Margaret Hesse, Attorney,
Community and Consumer Law
Division (202/874–5750), Jacqueline
Lussier, Senior Attorney, or Saumya
Bhavsar, Attorney, Legislative and
Regulatory Activities Division (202/
874–5090), Office of Chief Counsel.
Board: Diane Jackins, Senior Review
Examiner, Jennifer Lowe, Review
Examiner (202/452–3946), Division of
Consumer and Community Affairs;
Lawranne Stewart, Senior Attorney
(202/452–3513), or Rick Heyke,
Attorney (202/452–3688), Legal
Division. For the hearing impaired only,
Telecommunication Device for the Deaf
(TDD), Earnestine Hill or Dorothea
Thompson (202/452–3544).
FDIC: Mark Mellon, Senior Attorney,
Regulation and Legislation Section (202/
898–3854), Legal Division, or Ken
Baebel, Senior Review Examiner (202/
942–3086), or Barbara L. Boehm,
Consumer Affairs Specialist (202/942–
3631), Division of Compliance and
Consumer Affairs.
OTS: Larry Clark, Program Manager,
Compliance and Trust, Compliance
Policy (202/906–5628); Catherine
Shepard, Senior Attorney, Regulations
and Legislation Division (202/906–
7275), Office of Chief Counsel.
FCA: Robert G. Magnuson, Policy
Analyst, Regulation Development (703/
883–4498), Office of Examination; or
William L. Larsen, Senior Attorney,
Regulatory Operations Division (703/
883–4020), Office of General Counsel.
For the hearing impaired only, TDD
(703/883–4444).
NCUA: Kimberly Iverson, Program
Officer (703/518–6375), Office of
Examination and Insurance; or Jeffrey
53963Federal Register / Vol. 60, No. 201 / Wednesday, October 18, 1995 / Proposed Rules
1 The heads of five of the six agencies (OCC,
Board, FDIC, OTS, and NCUA) comprise the
membership of the FFIEC.
2 See, e.g., CDRI Act sections 521 (flood insurance
purchase requirement for Federal disaster relief
recipients may not be waived), 522 (Federal agency
lenders subject to provisions of statute), 573
(increase in maximum flood insurance coverage
amounts), 579 (delay of effective date of flood
insurance policies), and 582 (flood disaster
assistance barred in certain circumstances; duty to
provide certain notices on transfer of property).
3 This proposal is also a component of the OCC’s
Regulation Review Program. Each of the agencies
involved in this rulemaking is engaged in a similar
effort to reduce unnecessary regulatory burden and
to simplify and clarify its regulations.
4 The Federal Emergency Management Agency
(FEMA) administers the NFIP; its regulations
implementing the NFIP appear at 44 CFR parts 50–
79 (1995).
5 44 CFR 59.1.
6 44 CFR part 65.
7 44 CFR part 60.
8 H.R. Conf. Rep. No. 652, 103d Cong., 2d Sess.
195 (1994) (Conference Report).
9 In the statute, the term lender also refers to a
Federal agency lender, which means a Federal
agency that makes direct loans secured by improved
real estate or a mobile home. This proposal does not
apply to Federal agency lenders. See CDRI Act
sections 511, 512, 522.
Mooney, Staff Attorney (703/518–6563),
Office of General Counsel.
SUPPLEMENTARY INFORMATION:
I. Background
A. Introduction
The Riegle Community Development
and Regulatory Improvement Act, Pub.
L. 103–325, 108 Stat. 2160 (CDRI Act),
which the President signed into law on
September 23, 1994, comprehensively
revised the Federal flood insurance
statutes. The flood insurance provisions
of the CDRI Act require the OCC, Board,
FDIC, OTS, and NCUA to revise their
current flood insurance regulations. The
FCA is required to promulgate flood
insurance regulations for the first time.
The six agencies are issuing this
proposal jointly in order to fulfill these
statutory requirements. All six of the
agencies have coordinated and
consulted with the Federal Financial
Institutions Examination Council
(FFIEC), as is required by certain of the
CDRI Act flood insurance provisions.1
This preamble first briefly describes
the National Flood Insurance Program
(NFIP), then highlights the CDRI Act
amendments to it that are of significance
to the institutions supervised by the six
agencies. Institutions are encouraged to
consult the CDRI Act for further detail
about the provisions described here as
well as for amendments to the NFIP that
do not require rulemaking by the six
agencies.2
Following the description of the
statutory background is a discussion of
the substance of the proposed
regulations. The agencies’ proposals are
substantively consistent, although the
format of the regulatory text varies in
order to accommodate the format
currently in use at each agency.3 With
respect to flood insurance regulations,
these proposals satisfy the statutory
obligations of the OCC, Board, FDIC,
and OTS under section 303(a) of the
CDRI Act. That section requires each of
these agencies to review and streamline
its regulations and to work jointly to
make uniform all regulations and
guidelines implementing common
statutory or supervisory policies.
B. The National Flood Insurance
Program
The NFIP is administered primarily
under two statutes: the National Flood
Insurance Act of 1968 (1968 Act) and
the Flood Disaster Protection Act of
1973 (1973 Act). These statutes are
codified at 42 U.S.C. 4001–4129.4 The
1968 Act made Federally subsidized
flood insurance available to owners of
improved real estate or mobile homes
located in special flood hazard areas if
their community participates in the
NFIP. A special flood hazard area
(SFHA) is an area within a flood plain
having a one percent or greater chance
of flood occurrence in any given year.5
SFHAs are delineated on maps issued
by FEMA for individual communities.6
A community establishes its eligibility
to participate in the NFIP by adopting
and enforcing floodplain management
measures to regulate new construction
and by making substantial
improvements within its SFHAs to
eliminate or minimize future flood
damage.7
The 1973 Act amended the NFIP by
requiring the OCC, Board, FDIC, OTS,
and NCUA to issue regulations
governing the lending institutions they
supervise. The regulations directed
lenders to require flood insurance on
improved real estate or mobile homes
serving as collateral for a loan (security
property) if the security property was
located in a SFHA in a participating
community. To implement statutory
amendments enacted in 1974, the
regulations required lenders to notify
borrowers that security property is
located in a SFHA and of the
availability of Federal disaster
assistance with respect to the property
in the event of a flood.
C. CDRI Act Amendments
Title V of the CDRI Act, the National
Flood Insurance Reform Act of 1994
(Reform Act), comprehensively revises
the NFIP. The Reform Act is intended to
increase compliance with flood
insurance requirements and
participation in the NFIP in order 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.8
The Reform Act changed some of the
terms used to refer to regulators and
entities subject to the NFIP. The Reform
Act refers to the six regulators
collectively as the Federal entities for
lending regulation. This preamble
discussion refers to the six regulators as
the Federal entities for lending
regulation or the agencies. The Reform
Act, and this preamble discussion, refer
to the institutions supervised by the six
agencies collectively as regulated
lending institutions or lenders.9
The following provisions of the
Reform Act are especially significant to
regulated lending institutions.
References to the appropriate sections of
the CDRI Act are given in parentheses.
Scope of coverage (sections 511, 512,
522). The Reform Act expanded the
scope of coverage of the NFIP in several
ways. First, it added the FCA to the list
of regulators covered by the NFIP and
added Farm Credit banks and other
lenders supervised by the FCA to the
list of covered financial institutions.
Second, the Reform Act directed the
Federal National Mortgage Association
(Fannie Mae) and the Federal Home
Loan Mortgage Corporation (Freddie
Mac) to implement procedures
‘‘reasonably designed to ensure’’ that
property securing the residential
mortgage loans they purchase is covered
by flood insurance if the security
property is located in a SFHA in a
community that participates in the
NFIP. Thus, entities not directly covered
by Federal flood insurance laws will
indirectly be required to satisfy the
statutory flood insurance requirements
if they sell residential mortgage loans to
Fannie Mae or Freddie Mac.
Third, as discussed more fully below,
some of the Reform Act’s provisions
apply to loan servicers. The Reform Act
defines the term servicer to include any
person responsible for receiving any
scheduled periodic payments from a
borrower pursuant to the terms of a
loan, including amounts for taxes,
insurance premiums, and other charges
with respect to the property securing a
loan, and making the payments with
respect to the amounts received from
the borrower as may be required
pursuant to the terms of the loan.
Dates of Applicability. Except for the
standard flood hazard determination
1 The heads of five of the six agencies (OCC,
Board, FDIC, OTS, and NCUA) comprise the
membership of the FFIEC.
2 See, e.g., CDRI Act sections 521 (flood insurance
purchase requirement for Federal disaster relief
recipients may not be waived), 522 (Federal agency
lenders subject to provisions of statute), 573
(increase in maximum flood insurance coverage
amounts), 579 (delay of effective date of flood
insurance policies), and 582 (flood disaster
assistance barred in certain circumstances; duty to
provide certain notices on transfer of property).
3 This proposal is also a component of the OCC’s
Regulation Review Program. Each of the agencies
involved in this rulemaking is engaged in a similar
effort to reduce unnecessary regulatory burden and
to simplify and clarify its regulations.
4 The Federal Emergency Management Agency
(FEMA) administers the NFIP; its regulations
implementing the NFIP appear at 44 CFR parts 50–
79 (1995).
5 44 CFR 59.1.
6 44 CFR part 65.
7 44 CFR part 60.
8 H.R. Conf. Rep. No. 652, 103d Cong., 2d Sess.
195 (1994) (Conference Report).
9 In the statute, the term lender also refers to a
Federal agency lender, which means a Federal
agency that makes direct loans secured by improved
real estate or a mobile home. This proposal does not
apply to Federal agency lenders. See CDRI Act
sections 511, 512, 522.
Mooney, Staff Attorney (703/518–6563),
Office of General Counsel.
SUPPLEMENTARY INFORMATION:
I. Background
A. Introduction
The Riegle Community Development
and Regulatory Improvement Act, Pub.
L. 103–325, 108 Stat. 2160 (CDRI Act),
which the President signed into law on
September 23, 1994, comprehensively
revised the Federal flood insurance
statutes. The flood insurance provisions
of the CDRI Act require the OCC, Board,
FDIC, OTS, and NCUA to revise their
current flood insurance regulations. The
FCA is required to promulgate flood
insurance regulations for the first time.
The six agencies are issuing this
proposal jointly in order to fulfill these
statutory requirements. All six of the
agencies have coordinated and
consulted with the Federal Financial
Institutions Examination Council
(FFIEC), as is required by certain of the
CDRI Act flood insurance provisions.1
This preamble first briefly describes
the National Flood Insurance Program
(NFIP), then highlights the CDRI Act
amendments to it that are of significance
to the institutions supervised by the six
agencies. Institutions are encouraged to
consult the CDRI Act for further detail
about the provisions described here as
well as for amendments to the NFIP that
do not require rulemaking by the six
agencies.2
Following the description of the
statutory background is a discussion of
the substance of the proposed
regulations. The agencies’ proposals are
substantively consistent, although the
format of the regulatory text varies in
order to accommodate the format
currently in use at each agency.3 With
respect to flood insurance regulations,
these proposals satisfy the statutory
obligations of the OCC, Board, FDIC,
and OTS under section 303(a) of the
CDRI Act. That section requires each of
these agencies to review and streamline
its regulations and to work jointly to
make uniform all regulations and
guidelines implementing common
statutory or supervisory policies.
B. The National Flood Insurance
Program
The NFIP is administered primarily
under two statutes: the National Flood
Insurance Act of 1968 (1968 Act) and
the Flood Disaster Protection Act of
1973 (1973 Act). These statutes are
codified at 42 U.S.C. 4001–4129.4 The
1968 Act made Federally subsidized
flood insurance available to owners of
improved real estate or mobile homes
located in special flood hazard areas if
their community participates in the
NFIP. A special flood hazard area
(SFHA) is an area within a flood plain
having a one percent or greater chance
of flood occurrence in any given year.5
SFHAs are delineated on maps issued
by FEMA for individual communities.6
A community establishes its eligibility
to participate in the NFIP by adopting
and enforcing floodplain management
measures to regulate new construction
and by making substantial
improvements within its SFHAs to
eliminate or minimize future flood
damage.7
The 1973 Act amended the NFIP by
requiring the OCC, Board, FDIC, OTS,
and NCUA to issue regulations
governing the lending institutions they
supervise. The regulations directed
lenders to require flood insurance on
improved real estate or mobile homes
serving as collateral for a loan (security
property) if the security property was
located in a SFHA in a participating
community. To implement statutory
amendments enacted in 1974, the
regulations required lenders to notify
borrowers that security property is
located in a SFHA and of the
availability of Federal disaster
assistance with respect to the property
in the event of a flood.
C. CDRI Act Amendments
Title V of the CDRI Act, the National
Flood Insurance Reform Act of 1994
(Reform Act), comprehensively revises
the NFIP. The Reform Act is intended to
increase compliance with flood
insurance requirements and
participation in the NFIP in order 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.8
The Reform Act changed some of the
terms used to refer to regulators and
entities subject to the NFIP. The Reform
Act refers to the six regulators
collectively as the Federal entities for
lending regulation. This preamble
discussion refers to the six regulators as
the Federal entities for lending
regulation or the agencies. The Reform
Act, and this preamble discussion, refer
to the institutions supervised by the six
agencies collectively as regulated
lending institutions or lenders.9
The following provisions of the
Reform Act are especially significant to
regulated lending institutions.
References to the appropriate sections of
the CDRI Act are given in parentheses.
Scope of coverage (sections 511, 512,
522). The Reform Act expanded the
scope of coverage of the NFIP in several
ways. First, it added the FCA to the list
of regulators covered by the NFIP and
added Farm Credit banks and other
lenders supervised by the FCA to the
list of covered financial institutions.
Second, the Reform Act directed the
Federal National Mortgage Association
(Fannie Mae) and the Federal Home
Loan Mortgage Corporation (Freddie
Mac) to implement procedures
‘‘reasonably designed to ensure’’ that
property securing the residential
mortgage loans they purchase is covered
by flood insurance if the security
property is located in a SFHA in a
community that participates in the
NFIP. Thus, entities not directly covered
by Federal flood insurance laws will
indirectly be required to satisfy the
statutory flood insurance requirements
if they sell residential mortgage loans to
Fannie Mae or Freddie Mac.
Third, as discussed more fully below,
some of the Reform Act’s provisions
apply to loan servicers. The Reform Act
defines the term servicer to include any
person responsible for receiving any
scheduled periodic payments from a
borrower pursuant to the terms of a
loan, including amounts for taxes,
insurance premiums, and other charges
with respect to the property securing a
loan, and making the payments with
respect to the amounts received from
the borrower as may be required
pursuant to the terms of the loan.
Dates of Applicability. Except for the
standard flood hazard determination