NRMLA submitted comments to the Department of Housing and Urban Development in support of a proposed amendment to Federal Housing Administration regulations that would allow lenders to accept private flood insurance policies on FHA-insured properties located in Special Flood Hazard Areas.
NRMLA notes in its comments that private flood insurance is often more affordable and more comprehensive than National Flood Insurance Program (NFIP) policies. “Permitting FHA borrowers to pursue private flood insurance will help engender a more robust private market and better provide consumers with greater choice and access to flood insurance across the United States,” says NRMLA.
However, NRMLA believes that mortgagees lack the expertise to evaluate and determine whether private flood insurance policies conform to HUD standards. For this reason, NRMLA supports FHA’s proposal to include a “compliance aid” provision allowing mortgagees to accept private policies, without further review, where the policy contains the language: “This policy meets the definition of private flood insurance contained in 24 CFR 203.16a(e) for FHA-insured mortgages.” Read NRMLA’s full comments by logging into the Comment Letter section of NRMLAonline.org.