ANSWER: The Biggert Waters Flood Insurance Reform Act of 2012 extended the flood insurance requirement until September 30, 2017. On September 8, 2017 the National Flood Insurance Program was extended until December 8, 2017. This is merely a short-term extension in order to help emergency funding for areas affected by the recent hurricanes. A long-term extension has yet to be decided upon by lawmakers.
Awareness of the changes and status of the NFIP coverage will be key for all community bank compliance officers as 2017 comes to a close. Being prepared for a potential lapse in the NFIP will decrease confusion and stress for all banks. It is important to note that prior to the Biggert Waters reform, the NFIP was extended on a short-term basis multiple times and the program lapsed on four occurrences. At the time of NFIP lapse, the regulatory agencies issued informal guidance to institutions. In all instances, lenders were permitted to continue making loans subject to the flood requirements without flood insurance during the period when the NFIP was not available. Lenders were still required to make timely flood determinations, complete and provide accurate notices to borrowers, and comply with other parts of the flood regulations. Lenders were requested to have a system in place to ensure that flood policies were obtained as soon as available following NFIP reauthorization. Lenders were also reminded that safety and soundness considerations were still required when making all loan decisions.