Loans in Special Flood Hazard Areas
September 11, 1996
Circular No. 10871

Amendments to Regulation H

To All State Member Banks in the Second Federal Reserve District:

Following is the text of a statement issued by the Board of Governors of the Federal Reserve System:

The Federal Reserve Board is amending regulations regarding loans in areas having special flood hazards.

    The Board's action is effective October 1, 1996.

    This action implements the provisions of the National Flood Insurance Reform Act of 1994.

    As required by statute, the final rules establish new escrow requirements for flood insurance premiums, add reference to the statutory authority and the requirement for lenders and servicers to "force place" flood insurance under certain circumstances, enhance flood hazard notice requirements, set forth new authority for lenders to charge fees for determining whether a property is located in a special flood hazard area, and contain various other provisions necessary to implement the National Flood Insurance Reform Act of 1994.

    Similar action is being taken by the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), the National Credit Union Administration (NCUA), and the Farm Credit Administration (FCA).

The text of the interagency notice and the amendments, effective October 1, 1996, to the Board's Regulation H (12 CFR Part 208), has been published in the Federal Register of August 29, is available as a (pdf) and as text. (Note that the amendments to the Board's Regulation H apply only to state member banks; the regulations of the other agencies apply to other financial institutions.)

Questions on this matter may be directed to Janice A. Oser, Supervising Examiner, Compliance Examinations Department.

William J. McDonough