Blog: Housing and Urban Development expands homeowner flood insurance options – Financial Regulation News – Financial Regulation News

Housing and Urban Development (HUD) officials have detailed an initiative enabling homeowners with FHA-insured mortgages to obtain flood insurance policies meeting FHA requirements from private insurance providers.

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“HUD is increasing the flood insurance choices available to individuals and families with FHA-insured loans in areas that FEMA has designated to be at special risk for flooding,” HUD Secretary Marcia L. Fudge said regarding the effort via the
Federal Housing Administration (FHA). “Flood insurance is required to ensure families and individuals are prepared if disaster strikes. Increasing consumer options for this important protection is one way we are building more resilient communities in the face of climate change.”

The expanded flood insurance options will become effective on Dec. 21, 2022. The change stemmed from a final rule published in the Federal Register and a companion Mortgagee Letter providing implementation guidance for FHA-approved lenders.

Prior to the expanded options, only flood insurance obtained through the National Flood Insurance Program (NFIP) was permissible for FHA-insured mortgages, according to HUD.

“We know borrowers face affordability challenges right now, yet a flood can be devastating to a family who is not properly insured,” Federal Housing Commissioner Julia Gordon said. “The choice to select a private flood insurance option may enable some borrowers to obtain policies that are less expensive or provide enhanced coverage.”

The effort to increase flood insurance options guides the integration of climate resilience and environmental justice into HUD’s core programs and policies.

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