There are three specific notification requirements a lender must consider. In a addition a lender, or their determination company, must complete the standard flood zone determination form prior to loan funding.

Under the 1994 law, all regulated lenders must deal with the following notices:

Notification to Borrower - otherwise known as "Notice of Special Flood Hazard and Availability of Federal Disaster Relief Assistance". Lenders must continue to notify only those borrowers whose loans secure a structure located in a special flood hazard area.

The notice must be provided within a reasonable time before completion of the loan transaction to ensure that a flood zone determination is made as a condition of the loan being closed.

Notification of Change of Servicer -the 1994 Flood Act mandates that if the secured property is in a special hazard flood area, a regulated lender must notify FEMA or their designee.

Currently FEMA has designated the various flood insurance carriers to receive the notice. Any time there is a change of servicer on lending institutions must notify the insurance carrier.

Policy Expiration Notice - The 1994 Flood Act and the Standard Flood Insurance Policy require that the Flood Insurance Company send a notice of the policy renewal at least 45 days before the policy expiration date of expiration of the policy contract. This notice must be sent to the insured, any known mortgagees, servicer, and the owner of the property.

In addition the notice must be sent by first class mail no later than forty-five days prior to expiration to the last known address of the recipients. The law does not require proof of receipt of the notice.

We hope you found this short summary helpful. If you would like to find out more information, of if you’d like a free copy of the most recent FEMA publication "Mandatory Purchase of Flood Insurance Guidelines" please call 1-800-933-5663 ext. 100.

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