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F ederal Reserve Bank o f Dallas DALLAS. TEXAS 75222 C irc u la r No. 78-152 October 27, 1978 REGULATION H — MEMBERSHIP OF STATE BANKING INSTITU TIO N S IN THE FEDERAL RESERVE SYSTEM Loans by State Member Banks in Special Flood-Hazardous Areas TO ALL STATE MEMBER BANKS AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE D IS TR IC T: T h e Federal Insurance Adm inistration (FIA ) has issued guidelines effective F e b ru a ry 17, 1978, re g a rd in g the "M andatory Purchase of Flood in surance" for compliance by banks w ith Section 102(b) of the Flood Disaster Protection Act of 1973 (43 Federal Re gis ter 7142 (1978)) . These guidelines state: At the time of the loan closing, . . .unless the lender or the su p ervisory instrum entality rules o therw ise, a copy of the flood insurance app licatio n, indicating that the full premium has been paid is sufficient evidence of the purchase of flood insurance, since th e re is norm ally a 15-day w aiting period before the policy is actually issued and the coverage becomes effective. H o w ever, once the policy has been issued, a copy of the policy should be obtained and maintained by the lender (43 Federal Re gi s ter 7146 (1978)) . In a letter dated June 14, 1978, the Federal Insurance A dm inistrator stated that a copy of a mortgagor's check issued in payment of the flood insurance policy premium or an agent's certification or letter that a m ortgagor has purchased the re q u isite flood insurance would also be sufficient proof of purchase of flood insurance. Banks and others are encouraged to use the fo llo w in g incom ing W ATS numbers in contacting this Bank: 1-800-492-4403 (intrastate) and 1-800-527-4970 (interstate). For calls placed locally, please use 651 plus the extension referred to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - 2 In an effort to expedite the closing of loans secured by improved real estate located or to be located in a special flood-hazardous area of a com m unity that participates in the National Flood Insurance Program , any of these documents relating to proof of purchase of flood insurance, and any other such documents accepted by a State member bank in good fa ith , w ill be regarded as acceptable evidence of State member banks' compliance w ith Section 20 8 .8 (e ) (1) of Regulation H . H o w ever, it should be noted that the standard flood insurance policy is effective no later than 15 days from the date that the application for flood insurance is submitted, together w ith the premium for the firs t year of coverage. T h e re fo re , a State member bank may decide to delay a loan closing for 15 days from the date of a b o rro w e r's execution of a flood insurance policy application in o rd e r to ensure that there is no interim period d u rin g which im proved real p ro p e rty located or to be located in a flood-hazardous area in a p articipating community that secures a loan is not covered by flood insurance. Enclosed is a copy of form HU D-1506— Certification of Proof of P u r chase of Flood Insurance. A completed form HUD-1506 tendered at a closing w ill be sufficient proof of purchase of flood insurance for purposes of Section 208.8 (e )( 1 ) of Regulation H. Any questions re g a rd in g this m atter should be directed to this Bank's Bank Supervision and Regulations Departm ent, Consumer A ffairs Section, at E x t. 6171. S in ce re ly yo u rs , Robert H . Boykin F irst Vice President Enclosure L. 5 DLPAF1TMC N1 O f M OU 5 I N C V A N O U R O A N D E V E L O P M E N T C E R T IF IC A T IO N OF PROO F OF PURCHASE O F F L O O D IN S U R A N C E 1 ° : ------------------------------------------------------------ -- _ Date:. (Lending Institution) ( Federal Agcncy) Re: (I.oan) (Transaction) N o . : ____________ ________ (Grantee) (Borrower) (Insured):______________________________________ ______________ T his w ill c ertify that, as o f this date, a F lo o d Insurance Policy, w i t h Mortgage Clause payable to y o u r in stitu tio n , lias been applied For and the p re m iu m f o r one year has been re m itte d to the servicing agent o f the N a tio n a l F lo o d Insurance Program or (other insuring carrier). T h e policy will be effective no later than 15 days f ro m the d ate o f e xecutio n o f the app lica tio n and is applicable to the (describe building) lo cated at: E ffec tive D a t e : ______________________________ A n n u a l P r e m i u m : 5 . Policy A m o u n t A p p lie d F o r: $______________structure S_____________contents Address o f A g en c y: ___________________________________________ A g c n c y :____________ B y : ________ ( A uthorized Signature)
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