42 U.S.C. § 4012a — Flood insurance purchase and compli-

Page 6011 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 4012a 1969, 83 Stat. 397; Pub. L. 92–213, § 2(c)(1), Dec. 22, 1971, 85 Stat. 775; Pub. L. 98–181, title I [title IV, § 451(d)(1)], Nov. 30, 1983, 97 Stat. 1229; Pub. L. 112–141, div. F, title II, §§ 100204, 100238(b)(1), July 6, 2012, 126 Stat. 916, 958.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (b), was in the original a reference to ‘‘this title’’ meaning title XIII of Pub. L. 90–448, Aug. 1, 1968, 82 Stat. 572, known as the National Flood Insurance Act of 1968, which is classi- fied principally to this chapter. For complete classi- fication of this Act to the Code, see Short Title note set out under section 4001 of this title and Tables. AMENDMENTS 2012—Subsec. (a). Pub. L. 112–141, § 100238(b)(1), sub- stituted ‘‘Administrator’’ for ‘‘Director’’. Subsec. (b). Pub. L. 112–141, § 100238(b)(1), substituted ‘‘Administrator’’ for ‘‘Director’’ in concluding provi- sions following par. (2). Subsec. (b)(A). Pub. L. 112–141, § 100204(1), which di- rected amendment of subsec. (b)(2)(A) by inserting ‘‘not described in subsection (a) or (d)’’ after ‘‘properties’’, was executed by making the insertion in subpar. (A) following first concluding provisions to reflect the probable intent of Congress. Subsec. (c). Pub. L. 112–141, § 100238(b)(1), substituted ‘‘Administrator’’ for ‘‘Director’’ in introductory provi- sions. Subsec. (d). Pub. L. 112–141, § 100204(2), added subsec. (d). 1983—Pub. L. 98–181 substituted ‘‘Director’’ for ‘‘Sec- retary’’ wherever appearing. 1971—Subsec. (a). Pub. L. 92–213 inserted reference to church properties. 1969—Subsec. (c)(2). Pub. L. 91–152 substituted ‘‘De- cember 31, 1971, adequate’’ for ‘‘June 30, 1970, perma- nent’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 120 days following Aug. 1, 1968, or such later date prescribed by the Secretary but in no event more than 180 days following Aug. 1, 1968, see sec- tion 1377 of Pub. L. 90–448, set out as a note under sec- tion 4001 of this title. TRANSFER OF FUNCTIONS For transfer of all functions, personnel, assets, com- ponents, authorities, grant programs, and liabilities of the Federal Emergency Management Agency, including the functions of the Under Secretary for Federal Emer- gency Management relating thereto, to the Federal Emergency Management Agency, see section 315(a)(1) of Title 6, Domestic Security. For transfer of functions, personnel, assets, and li- abilities of the Federal Emergency Management Agen- cy, including the functions of the Director of the Fed- eral Emergency Management Agency relating thereto, to the Secretary of Homeland Security, and for treat- ment of related references, see former section 313(1) and sections 551(d), 552(d), and 557 of Title 6, Domestic Secu- rity, and the Department of Homeland Security Reor- ganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6. § 4012a. Flood insurance purchase and compli- ance requirements and escrow accounts (a) Amount and term of coverage After the expiration of sixty days following December 31, 1973, no Federal officer or agency shall approve any financial assistance for acqui- sition or construction purposes for use in any area that has been identified by the Adminis- trator as an area having special flood hazards and in which the sale of flood insurance has been made available under the National Flood Insur- ance Act of 1968 [42 U.S.C. 4001 et seq.], unless the building or mobile home and any personal property to which such financial assistance re- lates is covered by flood insurance in an amount at least equal to its development or project cost (less estimated land cost) or to the maximum limit of coverage made available with respect to the particular type of property under the Na- tional Flood Insurance Act of 1968, whichever is less: Provided, That if the financial assistance provided is in the form of a loan or an insurance or guaranty of a loan, the amount of flood insur- ance required need not exceed the outstanding principal balance of the loan and need not be re- quired beyond the term of the loan. The require- ment of maintaining flood insurance shall apply during the life of the property, regardless of transfer of ownership of such property. (b) Requirement for mortgage loans (1) Regulated lending institutions Each Federal entity for lending regulation (after consultation and coordination with the Financial Institutions Examination Council established under the Federal Financial Insti- tutions Examination Council Act of 1974 [12 U.S.C. 3301 et seq.]) shall by regulation direct regulated lending institutions— (A) not to make, increase, extend, or renew any loan secured by improved real estate or a mobile home located or to be located in an area that has been identified by the Admin- istrator as an area having special flood haz- ards and in which flood insurance has been made available under the National Flood In- surance Act of 1968 [42 U.S.C. 4001 et seq.], unless the building or mobile home and any personal property securing such loan is cov- ered for the term of the loan by flood insur- ance in an amount at least equal to the out- standing principal balance of the loan or the maximum limit of coverage made available under the Act with respect to the particular type of property, whichever is less; and (B) to accept private flood insurance as satisfaction of the flood insurance coverage requirement under subparagraph (A) if the coverage provided by such private flood in- surance meets the requirements for coverage under such subparagraph. (2) Federal agency lenders A Federal agency lender may not make, in- crease, extend, or renew any loan secured by improved real estate or a mobile home located or to be located in an area that has been iden- tified by the Administrator as an area having special flood hazards and in which flood insur- ance has been made available under the Na- tional Flood Insurance Act of 1968, unless the building or mobile home and any personal property securing such loan is covered for the term of the loan by flood insurance in the amount provided in paragraph (1)(A). Each Federal agency lender shall accept private flood insurance as satisfaction of the flood in- Page 6012 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 4012a 1 So in original. The word ‘‘is’’ probably should not appear. surance coverage requirement under the pre- ceding sentence if the flood insurance cov- erage provided by such private flood insurance meets the requirements for coverage under such sentence. Each Federal agency lender shall issue any regulations necessary to carry out this paragraph. Such regulations shall be consistent with and substantially identical to the regulations issued under paragraph (1)(A). (3) Government-sponsored enterprises for housing The Federal National Mortgage Association and the Federal Home Loan Mortgage Cor- poration shall implement procedures reason- ably designed to ensure that, for any loan that is— (A) secured by improved real estate or a mobile home located in an area that has been identified, at the time of the origina- tion of the loan or at any time during the term of the loan, by the Administrator as an area having special flood hazards and in which flood insurance is available under the National Flood Insurance Act of 1968, and (B) purchased by such entity, the building or mobile home and any personal property securing the loan is covered for the term of the loan by flood insurance in the amount provided in paragraph (1)(A). The Fed- eral National Mortgage Association and the Federal Home Loan Mortgage Corporation shall accept private flood insurance as satis- faction of the flood insurance coverage re- quirement under paragraph (1)(A) if the flood insurance coverage provided by such private flood insurance meets the requirements for coverage under such paragraph and any re- quirements established by the Federal Na- tional Mortgage Association or the Federal Home Loan Mortgage Corporation, respec- tively, relating to the financial solvency, strength, or claims-paying ability of private insurance companies from which the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation will accept private flood insurance. (4) Applicability (A) Existing coverage Except as provided in subparagraph (B), paragraph (1) shall apply on September 23, 1994. (B) New coverage Paragraphs (2) and (3) shall apply only with respect to any loan made, increased, extended, or renewed after the expiration of the 1-year period beginning on September 23, 1994. Paragraph (1) shall apply with respect to any loan made, increased, extended, or re- newed by any lender supervised by the Farm Credit Administration only after the expira- tion of the period under this subparagraph. (C) Continued effect of regulations Notwithstanding any other provision of this subsection, the regulations to carry out paragraph (1), as in effect immediately be- fore September 23, 1994, shall continue to apply until the regulations issued to carry out paragraph (1) as amended by section 522(a) of Public Law 103–325 take effect. (5) Rule of construction Nothing in this subsection shall be con- strued to supersede or limit the authority of a Federal entity for lending regulation, the Fed- eral Housing Finance Agency, a Federal agen- cy lender, the Federal National Mortgage As- sociation, or the Federal Home Loan Mortgage Corporation to establish requirements relating to the financial solvency, strength, or claims- paying ability of private insurance companies from which the entity or agency will accept private flood insurance. (6) Notice (A) In general Each lender shall disclose to a borrower that is subject to this subsection that— (i) flood insurance is available from pri- vate insurance companies that issue stand- ard flood insurance policies on behalf of the national flood insurance program or directly from the national flood insurance program; (ii) flood insurance that provides the same level of coverage as a standard flood insurance policy under the national flood insurance program may be available from a private insurance company that issues policies on behalf of the company; and (iii) the borrower is encouraged to com- pare the flood insurance coverage, deductibles, exclusions, conditions and premiums associated with flood insurance policies issued on behalf of the national flood insurance program and policies issued on behalf of private insurance com- panies and to direct inquiries regarding the availability, cost, and comparisons of flood insurance coverage to an insurance agent. (B) Rule of construction Nothing in this paragraph shall be con- strued as affecting or otherwise limiting the authority of a Federal entity for lending regulation to approve any disclosure made by a regulated lending institution for pur- poses of complying with subparagraph (A). (7) Private flood insurance defined In this subsection, the term ‘‘private flood insurance’’ means an insurance policy that— (A) is issued by an insurance company that is— (i) licensed, admitted, or otherwise ap- proved to engage in the business of insur- ance in the State or jurisdiction in which the insured building is located, by the in- surance regulator of that State or jurisdic- tion; or (ii) in the case of a policy of difference in conditions, multiple peril, all risk, or other blanket coverage insuring nonresi- dential commercial property, is 1 recog- nized, or not disapproved, as a surplus lines insurer by the insurance regulator of the State or jurisdiction where the prop- erty to be insured is located; (B) provides flood insurance coverage which is at least as broad as the coverage Page 6013 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 4012a provided under a standard flood insurance policy under the national flood insurance program, including when considering deductibles, exclusions, and conditions of- fered by the insurer; (C) includes— (i) a requirement for the insurer to give 45 days’ written notice of cancellation or non-renewal of flood insurance coverage to— (I) the insured; and (II) the regulated lending institution or Federal agency lender; (ii) information about the availability of flood insurance coverage under the na- tional flood insurance program; (iii) a mortgage interest clause similar to the clause contained in a standard flood insurance policy under the national flood insurance program; and (iv) a provision requiring an insured to file suit not later than 1 year after date of a written denial of all or part of a claim under the policy; and (D) contains cancellation provisions that are as restrictive as the provisions contained in a standard flood insurance policy under the national flood insurance program. (c) Exceptions to purchase requirements (1) State-owned property Notwithstanding the other provisions of this section, flood insurance shall not be required on any State-owned property that is covered under an adequate State policy of self-insur- ance satisfactory to the Administrator. The Administrator shall publish and periodically revise the list of States to which this sub- section applies. (2) Small loans Notwithstanding any other provision of this section, subsections (a) and (b) shall not apply to any loan having— (A) an original outstanding principal bal- ance of $5,000 or less; and (B) a repayment term of 1 year or less. (3) Detached structures Notwithstanding any other provision of this section, flood insurance shall not be required, in the case of any residential property, for any structure that is a part of such property but is detached from the primary residential struc- ture of such property and does not serve as a residence. (d) Escrow of flood insurance payments (1) Regulated lending institutions (A) Federal entities responsible for lending regulations Each Federal entity for lending regulation (after consultation and coordination with the Federal Financial Institutions Examina- tion Council) shall, by regulation, direct that all premiums and fees for flood insur- ance under the National Flood Insurance Act of 1968, for residential improved real estate or a mobile home, shall be paid to the regu- lated lending institution or servicer for any loan secured by the residential improved real estate or mobile home, with the same frequency as payments on the loan are made, for the duration of the loan. Except as pro- vided in subparagraph (B), upon receipt of any premiums or fees, the regulated lending institution or servicer shall deposit such premiums and fees in an escrow account on behalf of the borrower. Upon receipt of a no- tice from the Administrator or the provider of the flood insurance that insurance pre- miums are due, the premiums deposited in the escrow account shall be paid to the pro- vider of the flood insurance. (B) Limitation Except as may be required under applica- ble State law, a Federal entity for lending regulation may not direct or require a regu- lated lending institution to deposit pre- miums or fees for flood insurance under the National Flood Insurance Act of 1968 in an escrow account on behalf of a borrower under subparagraph (A)— (i) if— (I) the regulated lending institution has total assets of less than $1,000,000,000; and (II) on or before July 6, 2012, the regu- lated lending institution— (aa) in the case of a loan secured by residential improved real estate or a mobile home, was not required under Federal or State law to deposit taxes, insurance premiums, fees, or any other charges in an escrow account for the entire term of the loan; and (bb) did not have a policy of consist- ently and uniformly requiring the de- posit of taxes, insurance premiums, fees, or any other charges in an escrow account for loans secured by residen- tial improved real estate or a mobile home; or (ii) in the case of a loan that— (I) is in a junior or subordinate posi- tion to a senior lien secured by the same residential improved real estate or mo- bile home for which flood insurance is being provided at the time of the origi- nation of the loan; (II) is secured by residential improved real estate or a mobile home that is part of a condominium, cooperative, or other project development, if the residential improved real estate or mobile home is covered by a flood insurance policy that— (aa) meets the requirements that the regulated lending institution is re- quired to enforce under subsection (b)(1); (bb) is provided by the condominium association, cooperative, homeowners association, or other applicable group; and (cc) the premium for which is paid by the condominium association, coopera- tive, homeowners association, or other applicable group as a common expense; Page 6014 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 4012a 2 See References in Text note below. (III) is secured by residential improved real estate or a mobile home that is used as collateral for a business purpose; (IV) is a home equity line of credit; (V) is a nonperforming loan; or (VI) has a term of not longer than 12 months. (2) Federal agency lenders Each Federal agency lender shall by regula- tion require and provide for escrow and pay- ment of any flood insurance premiums and fees relating to residential improved real es- tate and mobile homes securing loans made by the Federal agency lender under the cir- cumstances and in the manner provided under paragraph (1). Any regulations issued under this paragraph shall be consistent with and substantially identical to the regulations issued under paragraph (1). (3) Applicability of RESPA Escrow accounts established pursuant to this subsection shall be subject to the provi- sions of section 10 of the Real Estate Settle- ment Procedures Act of 1974 [12 U.S.C. 2609]. (4) ‘‘Residential improved real estate’’ defined For purposes of this subsection, the term ‘‘residential improved real estate’’ means im- proved real estate for which the improvement is a residential building. (5) Applicability This subsection shall apply only with re- spect to any loan made, increased, extended, or renewed after the expiration of the 1-year period beginning on September 23, 1994. (e) Placement of flood insurance by lender (1) Notification to borrower of lack of coverage If, at the time of origination or at any time during the term of a loan secured by improved real estate or by a mobile home located in an area that has been identified by the Adminis- trator (at the time of the origination of the loan or at any time during the term of the loan) as an area having special flood hazards and in which flood insurance is available under the National Flood Insurance Act of 1968 [42 U.S.C. 4001 et seq.], the lender or servicer for the loan determines that the building or mobile home and any personal property secur- ing the loan is not covered by flood insurance or is covered by such insurance in an amount less than the amount required for the property pursuant to paragraph (1), (2), or (3) of sub- section (b), the lender or servicer shall notify the borrower under the loan that the borrower should obtain, at the borrower’s expense, an amount of flood insurance for the building or mobile home and such personal property that is not less than the amount under subsection (b)(1), for the term of the loan. (2) Purchase of coverage on behalf of borrower If the borrower fails to purchase such flood insurance within 45 days after notification under paragraph (1), the lender or servicer for the loan shall purchase the insurance on be- half of the borrower and may charge the bor- rower for the cost of premiums and fees in- curred by the lender or servicer for the loan in purchasing the insurance, including premiums or fees incurred for coverage beginning on the date on which flood insurance coverage lapsed or did not provide a sufficient coverage amount. (3) Termination of force-placed insurance Within 30 days of receipt by the lender or servicer of a confirmation of a borrower’s ex- isting flood insurance coverage, the lender or servicer shall— (A) terminate any insurance purchased by the lender or servicer under paragraph (2); and (B) refund to the borrower all premiums paid by the borrower for any insurance pur- chased by the lender or servicer under para- graph (2) during any period during which the borrower’s flood insurance coverage and the insurance coverage purchased by the lender or servicer were each in effect, and any re- lated fees charged to the borrower with re- spect to the insurance purchased by the lender or servicer during such period. (4) Sufficiency of demonstration For purposes of confirming a borrower’s ex- isting flood insurance coverage, a lender or servicer for a loan shall accept from the bor- rower an insurance policy declarations page that includes the existing flood insurance pol- icy number and the identity of, and contact information for, the insurance company or agent. (5) Review of determination regarding re- quired purchase (A) In general The borrower and lender for a loan secured by improved real estate or a mobile home may jointly request the Administrator to re- view a determination of whether the build- ing or mobile home is located in an area having special flood hazards. Such request shall be supported by technical information relating to the improved real estate or mo- bile home. Not later than 45 days after the Administrator receives the request, the Ad- ministrator shall review the determination and provide to the borrower and the lender with a letter stating whether or not the building or mobile home is in an area having special flood hazards. The determination of the Administrator shall be final. (B) Effect of determination Any person to whom a borrower provides a letter issued by the Administrator pursuant to subparagraph (A), stating that the build- ing or mobile home securing the loan of the borrower is not in an area having special flood hazards, shall have no obligation under this title 2 to require the purchase of flood insurance for such building or mobile home during the period determined by the Admin- istrator, which shall be specified in the let- ter and shall begin on the date on which such letter is provided. (C) Effect of failure to respond If a request under subparagraph (A) is made in connection with the origination of a Page 6015 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 4012a 3 So in original. Probably should be ‘‘Agency’’. loan and the Administrator fails to provide a letter under subparagraph (A) before the later of (i) the expiration of the 45-day pe- riod under such subparagraph, or (ii) the closing of the loan, no person shall have an obligation under this title 2 to require the purchase of flood insurance for the building or mobile home securing the loan until such letter is provided. (6) Applicability This subsection shall apply to all loans out- standing on or after September 23, 1994. (f) Civil monetary penalties for failure to require flood insurance or notify (1) Civil monetary penalties against regulated lenders Any regulated lending institution that is found to have a pattern or practice of commit- ting violations under paragraph (2) shall be as- sessed a civil penalty by the appropriate Fed- eral entity for lending regulation in the amount provided under paragraph (5). (2) Lender violations The violations referred to in paragraph (1) shall include— (A) making, increasing, extending, or re- newing loans in violation of— (i) the regulations issued pursuant to subsection (b) of this section; (ii) the escrow requirements under sub- section (d) of this section; or (iii) the notice requirements under sec- tion 1364 of the National Flood Insurance Act of 1968 [42 U.S.C. 4104a]; or (B) failure to provide notice or purchase flood insurance coverage in violation of sub- section (e) of this section. (3) Civil monetary penalties against GSE’s (A) In general If the Federal National Mortgage Associa- tion or the Federal Home Loan Mortgage Corporation is found by the Director of the Federal Housing Finance Agency to have a pattern or practice of purchasing loans in violation of the procedures established pur- suant to subsection (b)(3), the Director of such Office 3 shall assess a civil penalty against such enterprise in the amount pro- vided under paragraph (5) of this subsection. (B) ‘‘Enterprise’’ defined For purposes of this subsection, the term ‘‘enterprise’’ means the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. (4) Notice and hearing A penalty under this subsection may be issued only after notice and an opportunity for a hearing on the record. (5) Amount A civil monetary penalty under this sub- section may not exceed $2,000 for each viola- tion under paragraph (2) or paragraph (3). (6) Lender compliance Notwithstanding any State or local law, for purposes of this subsection, any regulated lending institution that purchases flood insur- ance or renews a contract for flood insurance on behalf of or as an agent of a borrower of a loan for which flood insurance is required shall be considered to have complied with the regulations issued under subsection (b). (7) Effect of transfer on liability Any sale or other transfer of a loan by a reg- ulated lending institution that has committed a violation under paragraph (1), that occurs subsequent to the violation, shall not affect the liability of the transferring lender with re- spect to any penalty under this subsection. A lender shall not be liable for any violations re- lating to a loan committed by another regu- lated lending institution that previously held the loan. (8) Deposit of penalties Any penalties collected under this sub- section shall be paid into the National Flood Mitigation Fund under section 1367 of the Na- tional Flood Insurance Act of 1968 [42 U.S.C. 4104d]. (9) Additional penalties Any penalty under this subsection shall be in addition to any civil remedy or criminal penalty otherwise available. (10) Statute of limitations No penalty may be imposed under this sub- section after the expiration of the 4-year pe- riod beginning on the date of the occurrence of the violation for which the penalty is author- ized under this subsection. (g) Other actions to remedy pattern of non- compliance (1) Authority of Federal entities for lending regulation A Federal entity for lending regulation may require a regulated lending institution to take such remedial actions as are necessary to en- sure that the regulated lending institution complies with the requirements of the na- tional flood insurance program if the Federal agency for lending regulation makes a deter- mination under paragraph (2) regarding the regulated lending institution. (2) Determination of violations A determination under this paragraph shall be a finding that— (A) the regulated lending institution has engaged in a pattern and practice of non- compliance in violation of the regulations issued pursuant to subsection (b), (d), or (e) or the notice requirements under section 1364 of the National Flood Insurance Act of 1968 [42 U.S.C. 4104a]; and (B) the regulated lending institution has not demonstrated measurable improvement in compliance despite the assessment of civil monetary penalties under subsection (f). (h) Fee for determining location Notwithstanding any other Federal or State law, any person who makes a loan secured by improved real estate or a mobile home or any servicer for such a loan may charge a reasonable fee for the costs of determining whether the Page 6016 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 4012a 4 So in original. Probably should be followed by ‘‘of the Na- tional Flood Insurance Act of 1968’’. building or mobile home securing the loan is lo- cated in an area having special flood hazards, but only in accordance with the following re- quirements: (1) Borrower fee The borrower under such a loan may be charged the fee, but only if the determina- tion— (A) is made pursuant to the making, in- creasing, extending, or renewing of the loan that is initiated by the borrower; (B) is made pursuant to a revision or up- dating under section 1360(f) 4 [42 U.S.C. 4101(f)] of the floodplain areas and flood-risk zones or publication of a notice or com- pendia under subsection (h) or (i) of section 1360 4 [42 U.S.C. 4101(h), (i)] that affects the area in which the improved real estate or mobile home securing the loan is located or that, in the determination of the Adminis- trator, may reasonably be considered to re- quire a determination under this subsection; or (C) results in the purchase of flood insur- ance coverage pursuant to the requirement under subsection (e)(2). (2) Purchaser or transferee fee The purchaser or transferee of such a loan may be charged the fee in the case of sale or transfer of the loan. (Pub. L. 93–234, title I, § 102, Dec. 31, 1973, 87 Stat. 978; Pub. L. 98–181, title I [title IV, § 451(e)(1)], Nov. 30, 1983, 97 Stat. 1229; Pub. L. 103–325, title V, §§ 522–526, 531, 582(c), Sept. 23, 1994, 108 Stat. 2257–2262, 2267, 2287; Pub. L. 110–289, div. A, title I, § 1161(e), July 30, 2008, 122 Stat. 2780; Pub. L. 112–141, div. F, title II, §§ 100208, 100209(a), 100238(a)(1), 100239(a), 100244(a), July 6, 2012, 126 Stat. 919, 920, 958, 966; Pub. L. 112–281, § 1, Jan. 14, 2013, 126 Stat. 2485; Pub. L. 113–89, §§ 13(a), 25(a), Mar. 21, 2014, 128 Stat. 1026, 1030.) Editorial Notes REFERENCES IN TEXT The National Flood Insurance Act of 1968, referred to in subsecs. (a), (b), (d)(1), and (e)(1), and the Act, re- ferred to in subsec. (b), is title XIII of Pub. L. 90–448, Aug. 1, 1968, 82 Stat. 572, which is classified principally to this chapter (§ 4001 et seq.). For complete classifica- tion of this Act to the Code, see Short Title note set out under section 4001 of this title and Tables. The Federal Financial Institutions Examination Council Act of 1974, referred to in subsec. (b)(1), prob- ably means the Federal Financial Institutions Exam- ination Council Act of 1978, Pub. L. 95–630, title X, Nov. 10, 1978, 92 Stat. 3694, which is classified principally to chapter 34 (§ 3301 et seq.) of Title 12, Banks and Bank- ing. For complete classification of this Act to the Code, see Short Title note set out under section 3301 of Title 12 and Tables. Section 522(a) of Public Law 103–325, referred to in subsec. (b)(4)(C), was in original ‘‘section 522(a) of such Act’’, which generally amended subsec. (b) of this sec- tion. This title, referred to in subsec. (e)(5)(B), (C), means title I of Pub. L. 93–234, Dec. 31, 1973, 87 Stat. 977, which enacted this section and section 4104 of this title and amended sections 4001, 4013 to 4016, 4026, 4054, 4056, and 4121 of this title. CODIFICATION Section was enacted as part of the Flood Disaster Protection Act of 1973, and not as part of the National Flood Insurance Act of 1968 which comprises this chap- ter. AMENDMENTS 2014—Subsec. (c)(3). Pub. L. 113–89, § 13(a), added par. (3). Subsec. (d)(1)(A). Pub. L. 113–89, § 25(a)(1), substituted ‘‘subparagraph (B)’’ for ‘‘subparagraph (C)’’. Subsec. (d)(1)(B). Pub. L. 113–89, § 25(a)(2), substituted ‘‘under subparagraph (A)—’’ for ‘‘under subparagraph (A) or (B), if—’’ in introductory provisions, designated existing provisions as cl. (i) and inserted ‘‘if—’’ after cl. (i) designation, redesignated former cls. (i) and (ii) as subcls. (I) and (II), respectively, of cl. (i), redesignated former subcls. (I) and (II) as items (aa) and (bb), respec- tively, of subcl. (II), and added cl. (ii). 2013—Subsec. (d)(1)(A). Pub. L. 112–281 inserted ‘‘resi- dential’’ before ‘‘improved real estate’’ in two places. 2012—Subsec. (a). Pub. L. 112–141, § 100238(a)(1), sub- stituted ‘‘Administrator’’ for ‘‘Director’’. Subsec. (b)(1). Pub. L. 112–141, § 100239(a)(1), sub- stituted ‘‘; and’’ for period at end, substituted ‘‘institu- tions—’’ for ‘‘institutions’’, inserted subpar. (A) des- ignation before ‘‘not to make’’, and added subpar. (B). Pub. L. 112–141, § 100238(a)(1), substituted ‘‘Adminis- trator’’ for ‘‘Director’’. Subsec. (b)(2). Pub. L. 112–141, § 100239(a)(2), sub- stituted ‘‘paragraph (1)(A)’’ for ‘‘paragraph (1)’’ in two places and inserted ‘‘Each Federal agency lender shall accept private flood insurance as satisfaction of the flood insurance coverage requirement under the pre- ceding sentence if the flood insurance coverage pro- vided by such private flood insurance meets the re- quirements for coverage under such sentence.’’ after first sentence. Pub. L. 112–141, § 100238(a)(1), substituted ‘‘Adminis- trator’’ for ‘‘Director’’. Subsec. (b)(3). Pub. L. 112–141, § 100239(a)(3), sub- stituted ‘‘paragraph (1)(A). The Federal National Mort- gage Association and the Federal Home Loan Mortgage Corporation shall accept private flood insurance as sat- isfaction of the flood insurance coverage requirement under paragraph (1)(A) if the flood insurance coverage provided by such private flood insurance meets the re- quirements for coverage under such paragraph and any requirements established by the Federal National Mortgage Association or the Federal Home Loan Mort- gage Corporation, respectively, relating to the finan- cial solvency, strength, or claims-paying ability of pri- vate insurance companies from which the Federal Na- tional Mortgage Association or the Federal Home Loan Mortgage Corporation will accept private flood insur- ance.’’ for ‘‘paragraph (1).’’ in concluding provisions. Subsec. (b)(3)(A). Pub. L. 112–141, § 100238(a)(1), sub- stituted ‘‘Administrator’’ for ‘‘Director’’. Subsec. (b)(5) to (7). Pub. L. 112–141, § 100239(a)(4), added pars. (5) to (7). Subsec. (c)(1). Pub. L. 112–141, § 100238(a)(1), sub- stituted ‘‘Administrator’’ for ‘‘Director’’ in two places. Subsec. (d)(1). Pub. L. 112–141, § 100238(a)(1), sub- stituted ‘‘Administrator’’ for ‘‘Director’’. Pub. L. 112–141, § 100209(a), amended par. (1) generally. Prior to amendment, text read as follows: ‘‘Each Fed- eral entity for lending regulation (after consultation and coordination with the Financial Institutions Ex- amination Council) shall by regulation require that, if a regulated lending institution requires the escrowing of taxes, insurance premiums, fees, or any other charges for a loan secured by residential improved real estate or a mobile home, then all premiums and fees for flood insurance under the National Flood Insurance Act of 1968 for the real estate or mobile home shall be paid to the regulated lending institution or other servicer for the loan in a manner sufficient to make payments as due for the duration of the loan. Upon receipt of the premiums, the regulated lending institution or servicer Page 6017 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 4012a of the loan shall deposit the premiums in an escrow ac- count on behalf of the borrower. Upon receipt of a no- tice from the Administrator or the provider of the in- surance that insurance premiums are due, the regu- lated lending institution or servicer shall pay from the escrow account to the provider of the insurance the amount of insurance premiums owed.’’ Subsec. (e)(1). Pub. L. 112–141, § 100238(a)(1), sub- stituted ‘‘Administrator’’ for ‘‘Director’’. Subsec. (e)(2). Pub. L. 112–141, § 100244(a)(1), sub- stituted ‘‘purchasing the insurance, including pre- miums or fees incurred for coverage beginning on the date on which flood insurance coverage lapsed or did not provide a sufficient coverage amount’’ for ‘‘pur- chasing the insurance’’. Subsec. (e)(3). Pub. L. 112–141, § 100244(a)(3), added par. (3). Former par. (3) redesignated (5). Subsec. (e)(3). Pub. L. 112–141, § 100238(a)(1), sub- stituted ‘‘Administrator’’ for ‘‘Director’’ wherever ap- pearing. Subsec. (e)(4) to (6). Pub. L. 112–141, § 100244(a)(2), (3), added par. (4) and redesignated former pars. (3) and (4) as (5) and (6), respectively. Subsec. (f)(5). Pub. L. 112–141, § 100208, substituted ‘‘$2,000’’ for ‘‘$350’’ and struck out at end ‘‘The total amount of penalties assessed under this subsection against any single regulated lending institution or en- terprise during any calendar year may not exceed $100,000.’’ Subsec. (h)(1)(B). Pub. L. 112–141, § 100238(a)(1), sub- stituted ‘‘Administrator’’ for ‘‘Director’’. 2008—Subsec. (f)(3)(A). Pub. L. 110–289 substituted ‘‘Director of the Federal Housing Finance Agency’’ for ‘‘Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban De- velopment’’. 1994—Pub. L. 103–325, § 531, substituted section catch- line for former section catchline. Subsec. (a). Pub. L. 103–325, § 582(c), struck out ‘‘, during the anticipated economic or useful life of the project,’’ before ‘‘covered by flood insurance’’ and in- serted at end ‘‘The requirement of maintaining flood insurance shall apply during the life of the property, regardless of transfer of ownership of such property.’’ Subsec. (b). Pub. L. 103–325, § 522(a), amended subsec. (b) generally. Prior to amendment, subsec. (b) read as follows: ‘‘Each Federal instrumentality responsible for the supervision, approval, regulation, or insuring of banks, savings and loan associations, or similar insti- tutions shall by regulation direct such institutions not to make, increase, extend, or renew after the expiration of sixty days following December 31, 1973, any loan se- cured by improved real estate or a mobile home located or to be located in an area that has been identified by the Director as an area having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act of 1968, unless the building or mobile home and any personal property securing such loan is covered for the term of the loan by flood insurance in an amount at least equal to the outstanding principal balance of the loan or to the maximum limit of coverage made available with re- spect to the particular type of property under the Act, whichever is less.’’ Subsec. (c). Pub. L. 103–325, § 522(b), inserted heading, designated existing provisions as par. (1), inserted par. (1) heading, and added par. (2). Subsecs. (d) to (h). Pub. L. 103–325, §§ 523–526, added subsecs. (d) to (h). 1983—Pub. L. 98–181 substituted ‘‘Director’’ for ‘‘Sec- retary’’ wherever appearing. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2014 AMENDMENT Pub. L. 113–89, § 25(b)(1), Mar. 21, 2014, 128 Stat. 1031, provided that: ‘‘(1) IN GENERAL.— ‘‘(A) REQUIRED APPLICATION.—The amendments to section 102(d)(1) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a(d)(1)) made by section 100209(a) of the Biggert-Waters Flood Insurance Reform Act of 2012 (Public Law 112–141; 126 Stat. 920) and by sub- section (a) of this section shall apply to any loan that is originated, refinanced, increased, extended, or re- newed on or after January 1, 2016. ‘‘(B) OPTIONAL APPLICATION.— ‘‘(i) DEFINITIONS.—In this subparagraph— ‘‘(I) the terms ‘Federal entity for lending regu- lation’, ‘improved real estate’, ‘regulated lending institution’, and ‘servicer’ have the meanings given the terms in section 3 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4003); ‘‘(II) the term ‘outstanding loan’ means a loan that— ‘‘(aa) is outstanding as of January 1, 2016; ‘‘(bb) is not subject to the requirement to es- crow premiums and fees for flood insurance under section 102(d)(1) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a(d)(1)) as in effect on July 5, 2012; and ‘‘(cc) would, if the loan had been originated, refinanced, increased, extended, or renewed on or after January 1, 2016, be subject to the re- quirements under section 102(d)(1)(A) of the Flood Disaster Protection Act of 1973, as amended; and ‘‘(III) the term ‘section 102(d)(1)(A) of the Flood Disaster Protection Act of 1973, as amended’ means section 102(d)(1)(A) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a(d)(1)(A)), as amended by— ‘‘(aa) section 100209(a) of the Biggert-Waters Flood Insurance Reform Act of 2012 (Public Law 112–141; 126 Stat. 920); and ‘‘(bb) subsection (a) of this section. ‘‘(ii) OPTION TO ESCROW FLOOD INSURANCE PAY- MENTS.—Each Federal entity for lending regulation (after consultation and coordination with the Fed- eral Financial Institutions Examination Council) shall, by regulation, direct that each regulated lending institution or servicer of an outstanding loan shall offer and make available to a borrower the option to have the borrower’s payment of pre- miums and fees for flood insurance under the Na- tional Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.), including the escrow of such payments, be treated in the same manner provided under section 102(d)(1)(A) of the Flood Disaster Protection Act of 1973, as amended.’’ EFFECTIVE DATE OF 2012 AMENDMENT Pub. L. 112–141, div. F, title II, § 100209(b), July 6, 2012, 126 Stat. 920, which provided that the amendment made to this section by section 100209(a) of Pub. L. 112–141 would apply to any mortgage outstanding or entered into on or after the expiration of the 2-year period be- ginning on July 6, 2012, was repealed by Pub. L. 113–89, § 25(b)(2), Mar. 21, 2014, 128 Stat. 1032. For effective date of amendment by section 100209(a) of Pub. L. 112–141, see Effective Date of 2014 Amendment note above. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by section 582(c) of Pub. L. 103–325 appli- cable to disasters declared after Sept. 23, 1994, see sec- tion 5154a(e) of this title. RULE OF CONSTRUCTION Pub. L. 113–89, § 25(b)(3), Mar. 21, 2014, 128 Stat. 1032, provided that: ‘‘Nothing in this section [amending this section and enacting and repealing provisions set out as notes under this section] or the amendments made by this section shall be construed to supersede, during the period beginning on July 6, 2012 and ending on De- cember 31, 2015, the requirements under section 102(d)(1) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a(d)(1)), as in effect on July 5, 2012.’’ TRANSFER OF FUNCTIONS For transfer of all functions, personnel, assets, com- ponents, authorities, grant programs, and liabilities of Page 6018 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 4013 the Federal Emergency Management Agency, including the functions of the Under Secretary for Federal Emer- gency Management relating thereto, to the Federal Emergency Management Agency, see section 315(a)(1) of Title 6, Domestic Security. For transfer of functions, personnel, assets, and li- abilities of the Federal Emergency Management Agen- cy, including the functions of the Director of the Fed- eral Emergency Management Agency relating thereto, to the Secretary of Homeland Security, and for treat- ment of related references, see former section 313(1) and sections 551(d), 552(d), and 557 of Title 6, Domestic Secu- rity, and the Department of Homeland Security Reor- ganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6. TREATMENT OF FLOODPROOFED RESIDENTIAL BASEMENTS Pub. L. 113–89, § 21, Mar. 21, 2014, 128 Stat. 1028, pro- vided that: ‘‘The Administrator [of the Federal Emer- gency Management Agency] shall continue to extend exceptions and variances for flood-proofed basements consistent with section 60.6 of title 44, Code of Federal Regulations, which are effective April 3, 2009; and sec- tion 60.3 of such title, which are effective April 3, 2009.’’ § 4013. Nature and limitation of insurance cov- erage (a) Regulations respecting general terms and conditions of insurability The Administrator shall from time to time, after consultation with the advisory committee authorized under section 4025 of this title, appro- priate representatives of the pool formed or oth- erwise created under section 4051 of this title, and appropriate representatives of the insurance authorities of the respective States, provide by regulation for general terms and conditions of insurability which shall be applicable to prop- erties eligible for flood insurance coverage under section 4012 of this title, including— (1) the types, classes, and locations of any such properties which shall be eligible for flood insurance; (2) the nature and limits of loss or damage in any areas (or subdivisions thereof) which may be covered by such insurance; (3) the classification, limitation, and rejec- tion of any risks which may be advisable; (4) appropriate minimum premiums; (5) appropriate loss-deductibles; and (6) any other terms and conditions relating to insurance coverage or exclusion which may be necessary to carry out the purposes of this chapter. (b) Regulations respecting amount of coverage In addition to any other terms and conditions under subsection (a), such regulations shall pro- vide that— (1) any flood insurance coverage based on chargeable premium rates under section 4015 of this title which are less than the estimated premium rates under section 4014(a)(1) of this title shall not exceed— (A) in the case of residential properties— (i) $35,000 aggregate liability for any sin- gle-family dwelling, and $100,000 for any residential structure containing more than one dwelling unit, (ii) $10,000 aggregate liability per dwell- ing unit for any contents related to such unit, and (iii) in the States of Alaska and Hawaii, and in the Virgin Islands and Guam; the limits provided in clause (i) of this sen- tence shall be: $50,000 aggregate liability for any single-family dwelling, and $150,000 for any residential structure containing more than one dwelling unit; (B) in the case of business properties which are owned or leased and operated by small business concerns, an aggregate liability with respect to any single structure, includ- ing any contents thereof related to premises of small business occupants (as that term is defined by the Administrator), which shall be equal to (i) $100,000 plus (ii) $100,000 multi- plied by the number of such occupants and shall be allocated among such occupants (or among the occupant or occupants and the owner) under regulations prescribed by the Administrator; except that the aggregate li- ability for the structure itself may in no case exceed $100,000; and (C) in the case of church properties and any other properties which may become eli- gible for flood insurance under section 4012 of this title— (i) $100,000 aggregate liability for any single structure, and (ii) $100,000 aggregate liability per unit for any contents related to such unit; and (2) in the case of any residential building de- signed for the occupancy of from 1 to 4 fami- lies for which the risk premium rate is deter- mined in accordance with the provisions of section 4014(a)(1) of this title, additional flood insurance in excess of the limits specified in clause (i) of subparagraph (A) of paragraph (1) shall be made available, with respect to any single such building, up to an aggregate liabil- ity (including such limits specified in para- graph (1)(A)(i)) of $250,000; (3) in the case of any residential property for which the risk premium rate is determined in accordance with the provisions of section 4014(a)(1) of this title, additional flood insur- ance in excess of the limits specified in clause (ii) of subparagraph (A) of paragraph (1) shall be made available to every insured upon re- newal and every applicant for insurance so as to enable any such insured or applicant to re- ceive coverage up to a total amount (including such limits specified in paragraph (1)(A)(ii)) of $100,000; (4) in the case of any nonresidential build- ing, including a church, for which the risk pre- mium rate is determined in accordance with the provisions of section 4014(a)(1) of this title, additional flood insurance in excess of the lim- its specified in subparagraphs (B) and (C) of paragraph (1) shall be made available with re- spect to any single such building, up to an ag- gregate liability (including such limits speci- fied in subparagraph (B) or (C) of paragraph (1), as applicable) of $500,000, and coverage shall be made available up to a total of $500,000 aggregate liability for contents owned by the building owner and $500,000 aggregate liability for each unit within the building for contents owned by the tenant; and (5) any flood insurance coverage which may be made available in excess of the limits speci-